Can You Get a Personal or Consolidation Loan When Unemployed?

Being unemployed or not having a stable income can be stressful. This is particularly true if you have unexpected expenses crop up. And while a personal loan can be a useful tool to deal with these expenses, being out of work can complicate the situation.

However, it’s certainly not impossible. The fact is personal loans are often a go-to solution when you’re unemployed. You may need the extra cash to deal with a financial or medical emergency. You may want to consolidate your high-interest debt into one loan. You may even want to invest in new purchases such as a car that may help you find work.

Lenders are aware of this and may be willing to consider criteria other than your employment status when granting you a loan. Here’s a look at what goes into making these decisions and how you can go about getting a personal loan while you’re unemployed.

Factors That Go Into Making Lending Decisions

Traditional fiscal institutions, such as banks, are often constrained by strict lending rules. They tend to evaluate applicants based on standardized criteria, such as their credit quality. Here are some of the questions you’re likely to encounter as a personal loan applicant.

1. Credit Score

Your credit score is indicative of your credit profile and ability to repay the loan. While anything above 700 is considered good, anything below 580 is poor. Most people tend to score somewhere between 620 and 750.

2. Credit History

Lenders will also look at your credit history. If you’ve borrowed minimally in the past and been timely with your payments, it may stand you in good stead when you’re trying to get a personal loan while unemployed.

3. Income

Banks will often want to see proof of income on a loan application. This helps them understand if you have the means to comfortably repay the personal loan.

4. Debt-to-Income Ratio

This is the ratio of your monthly debt payments to your monthly income before taxes. Typically, lenders will look for a DTI ratio of 35% or less, but the lower the better.

Alternative Lending Factors

If you’re unemployed, traditional personal loan criteria, such as income and credit score, may not always work in your favor. Fortunately for you, there are other ways to qualify for a personal loan.

You’re particularly likely to see this with alternative financial companies, such as online lenders, which are often more flexible in how they evaluate applicants. Companies such as Lending Tower can accommodate a wide variety of applicants, regardless of their employment status or financial history.

Here are a few factors you can rely on to get a personal loan while you’re unemployed.

• Collateral: If your income is inconsistent, lenders may ask you to provide some other means of surety. If you have collateral you’re willing to offer, such as a car or other property, lenders may well extend you the loan.

• Co-Signer: A co-signer is someone who signs on the loan application with you as surety in the event you can’t repay it. With a reliable co-signer, lenders may offer you a personal loan even if you’re unemployed.

• Rental Income: Even if you don’t have a job, if you can demonstrate other sources of income, it may work in your favor. This includes rental income from any commercial or residential properties you own.

• Dividends: Do you receive recurring dividends or interest from investments like stocks or bonds? If so, you can use it to demonstrate a source of consistent income other than from a job.

• Royalties: You may also earn royalties from your past work. This includes products, such as software that’s being licensed, or intellectual property, such as a song or a book.

• Social Security: Social security benefits also count as a source of income and lenders will certainly consider it as proof of means to make monthly payments.

• Unemployment Benefits: You may be eligible for unemployment benefits if you’ve been rendered jobless through no fault of your own. In this case, lenders may approve you for a personal loan even though you’re unemployed.

• Alimony: If you receive monthly alimony or child support payments, you could use them to show you have the means to repay your personal loan.

• Spousal Income: You may also be able to include your spouse’s earnings in your loan application. Depending on the lender, they may extend you the loan, perhaps by listing your spouse as a co-borrower.

Better Yet, Partner With a Reputed Online Lender

You’re more likely to find success in getting a personal loan while unemployed if you approach an online loan company. Lending Tower was established precisely to help individuals access the funding they need when they need it. We consider a range of factors beyond just your credit score when granting a loan. Our bare minimum requirements are that you be 18 years of age and have a valid social security number.

See highly competitive rates, starting at 5.99%, and quickly receive your funds. You can use our personal loans for a variety of purposes, including debt consolidation. Speak to one of our loan advisors 24/7 to see how we can help you achieve financial security.