You might ask why a lender would approve a loan to someone with no source of income. Well the answer is simply that whether you have a job or not, there are realities in life that you can’t always afford. Unexpected and unavoidable bills sometimes because of an uncontrollable “I need money now” mentality, particularly medical expenses affect everyone, whether you have a job or not. This is why some lenders offer loans for the unemployed people. Sure they are very hard to get approved but if you have little or no other options you can speak with lenders about your options.
If you are unemployed and looking for a loan, there are a few factors that could really help you get approved for the loan. The biggest help would be if you can provide some security for the loan, but first you must fully understand what this means. If you provide a large value item as security for a loan – an item such as a house or car – then you are allowing the lender to take that item if you should be unable to make the necessary repayments on the loan. They could choose to sell the item to cover some or all of the repayments of the loan. While this provides security for them, it does put your assets at risk.
Not everyone will have a big ticket item they can use as security. Like with private personal loans, some lenders who offer loans for unemployed people or loans for single mothers will allow a co-signer or a guarantor against the loan. This is another person who will enter into the loan contract with you. By doing this they are accepting responsibility for the loan if you fail to meet the necessary repayments. The lender will decide if you have chosen an appropriate co-signer or guarantor or not. It is unlikely they will accept a co-signer or guarantor who is also unemployed. While this is a good option for most, it is important the co-signer or guarantor is fully aware of the responsibilities and risks involved – as it can mean their financial freedom and future is in the borrower’s hands.
Lastly the reason for your loan can have a big impact on your success rate of getting an approval. If the lender can see that you require the loan to better your job prospects or complete education it is more likely they will approve a loan rather than if you simply want a loan to take a holiday or buy expensive material items.
It is important to remember to shop around; there are a few lenders who approve loans for unemployed people so don’t feel you have to accept the first offer you find.