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Emergency Loans With No Job: Options for the Unemployed

Financial emergencies are a fact of life for many Americans. Unfortunately, many of us will face an emergency at some point in our lives. How we react when this happens—and how we get the money we need—may have repercussions for years to come. And if you don’t currently have a job, it makes it much more difficult when an emergency arises. If you’re currently in need of emergency loans with no job, then this article was written for you.

Many people who are in the midst of an emergency may not know where to turn. Emergency medical bills, vehicle or home repairs, or even unexpected children’s school costs can entirely ruin a well-planned budget.

When these costs arise, many Americans turn to personal loans and other quick cash options. But is that a safe choice?

Not only are there risky personal loans out there, but they may be the only option for borrowers that are currently unemployed. The unfortunate fact is that many affordable and safe loans will require the borrower to have a steady income. This is how the lender can reduce their risk and feel confident that the borrower will repay the amount on time.

So what does an unemployed borrower do in times of need? Well, there are emergency loans out there to help, but you’ll need to do plenty of research to make sure that the loan and lender are safe and trustworthy.

Finding Loans For The Unemployed

Finding an excellent personal loan while you’re unemployed may be a challenge. It makes sense if you think about it from the perspective of the lender. If you were giving someone a loan, you would probably want to make sure they can repay you and do it on time. And who’s more likely to repay a loan, a person with a job and steady income or someone who’s unemployed? Probably the person with a job.

That being said, some lenders may consider other forms of income outside of that from a job. For example, if you have income from any of the following sources, you may still qualify for certain personal loans:

  • Social Security
  • Long-term disability
  • Child support/alimony
  • Rental property
  • Retirement
  • Trust fund
  • Dividends or interest

If you have any of these sources of income, then there’s a chance, depending on the lender, you could still receive a loan. This will take a decent amount of research on your part. You’ll need to find a lender that seems trustworthy, research their loans and terms, and find out whether they are willing to work with you.

Having a good credit score can help in many cases. For example, you may find what you need if you have a form of income listed above and a good credit score. In addition, many lenders can be reasoned with, and if you can prove that you’re a trustworthy borrower, they may be willing to extend a loan to you. But this will likely only work if you have some form of income and a decent-to-good credit score.

Now, if your credit is lower than average, then you may run into some more issues. A low credit score can make your search for a loan much more difficult.

Loans for Unemployed Borrowers With Poor Credit

If you are currently unemployed and have a bad credit score, your personal loan journey may be much more difficult.

Having a poor credit score can affect a lot of aspects of your life. It will be more challenging to receive loan approvals, credit cards, line of credit products, and more. The simple fact is that lenders will be hesitant to offer loans to borrowers with bad credit. Having a low credit score tells the lender that you haven’t done a great job managing your money or making payments in the past.

But what exactly is “bad credit”? Well, a few companies track your financial behavior throughout your life and then give you a three-digit score based on how responsible you are with your money.

The most common credit-scoring model is called the FICO score. FICO stands for Fair, Isaac, and Company. It’s one of the leading credit bureaus that track your financial life. The FICO score breakdown is as follows:

  • 800–850: Exceptional credit
  • 740–799: Very good credit
  • 670–739: Good credit
  • 580–669: Fair credit
  • 0–580: Bad credit

The way it works is pretty simple. First, the credit bureau (in this case, FICO) tracks your financial behavior. For example, they pay attention to how many financial accounts you have open, how you use credit cards, whether you make payments on time, and more. Then, they compile this data into a three-digit number that represents how trustworthy you are with money.

Lenders are more likely to offer personal loans to borrowers with good scores. However, if you have bad credit and are also unemployed, you can probably understand why it would be difficult for a lender to offer you a personal loan.

Personal Loans You May Qualify For

There are, however, a few personal loans that you might qualify for if you’re unemployed and have a low credit score. But keep in mind that many of the readily available options will come at a cost. Because you have low credit, you may only qualify for costly loans that won’t offer you much money. And since you don’t have a job, you may only get offers for secured loans.

As opposed to unsecured, a secured loan is a loan that will require collateral from the borrower. Collateral is a valuable asset that the lender can keep if the borrower fails to repay the loan. This collateral acts as an added layer of security for the lender.

The following options are secured loans that you may qualify for even if you’re unemployed and don’t have good credit:

Title Loans

A title loan is a secured loan that requires the borrower to offer up the title to their vehicle as collateral. Once you offer up your vehicle, the lender inspects it and determines its value. You’ll be offered a loan based on a fraction of the value of the car.

If you fail to repay your title loan, the lender is legally allowed to seize your vehicle and sell it to recoup the money from the loan. You might be able to secure a title loan if you have a car, but is it worth the risk of losing your only mode of transportation?

Pawnshop Loans

These are also secured loans, but instead of offering up your vehicle, you can offer any valuable item that the pawnshop is interested in. Everyday items that borrowers use as collateral include jewelry, electronics, musical instruments, and more.

These work in the same way as title loans and any other secured loan. The main difference between these and title loans is the amount of money you can get and the type of collateral you need. Since your collateral likely won’t be worth as much as a vehicle, your loan will probably be much smaller.

But the same rules apply if you default on your loan. If you don’t repay your loan on time, the lender will sell your collateral to make their money back.

Payday Loans

A payday loan is an unsecured loan. This means that you can get one without offering any collateral. Instead, these loans are offered based on the borrower’s promise to repay the loan. But since you won’t be providing any collateral, it may be more challenging to obtain payday loans than a title or pawnshop loan.

Although some payday lenders may want to verify your income or check your credit history, you might find some that won’t. While this may seem reasonable if you aren’t employed or have low credit, it’s a dangerous practice. Any lender offering a safe and affordable loan will want to confirm that you’re capable of repaying it. So beware of payday lenders and others that don’t check these things.

The way to get payday loans is to find a lender willing to work with you and fill out the application. You can find payday loans online or at storefront locations. If they approve you, they offer you the money, and you only have about two weeks on average to repay it. Unfortunately, this short repayment period, coupled with high interest rates, makes payday loans challenging to repay on time.

The Dangers of Emergency Loans

Emergency loans come in many different shapes and sizes. Usually, emergency loans are short-term, small-dollar loans that people need in a hurry. They promise fast approval and fast cash. But just because a lender can give you money fast doesn’t mean you should use them.

Unfortunately, many emergency loans come with extremely high interest rates, short repayment terms, and unmanageable loan conditions. As a result, loans for the unemployed aren’t easy to come by. And if you do find a lender that offers personal loans for unemployed people, make sure you do your homework before applying.

Emergency loans like payday loans, title loans, pawnshop loans, and others are often predatory. They prey on borrowers with bad credit and trap them in personal loans with terrible interest rates and terms. One of the ways they do this is through a process called “rollover.”

What Is Rollover?

Rollover is common practice with many bad credit loans. It is essentially a way of extending the borrower’s loan term. Now, this might sound like a good thing, but it often leads to more interest and fees and a cycle of debt that’s difficult to escape.

If a borrower is having difficulty paying off their personal loan, the lender might offer them a chance to roll it over to a new term. Thus, they’re letting them extend the loan term, which provides more time to repay the debt. But when they do this, they also add more interest and fees to the loan amount.

These new fees added to the loan amount make it even more difficult to repay, even with more time. Rollover is just one of the reasons why loans for unemployed borrowers end up doing more harm than good. That personal loan might solve your problem in the short term, but it could create a cycle of debt that stays with you for years.

Some lenders that offer loans for the unemployed might even make more money through rollover than they do when a borrower pays the loan on time. This is why they aren’t constantly worried about checking your credit score because they might be hoping that you can’t repay your personal loan anyway.

In Conclusion

Loans for the unemployed are few and far between. This is because any credible lender will want to confirm that you’re employed and don’t have bad credit before offering you a loan. While bad credit alone might not prevent you from getting a decent loan, being unemployed might.

If you’re in search of a personal loan and you’re currently unemployed, your most likely options might be secured loans or a secured credit card. While some secured loans might be very risky—title loans, for example—you may not have too many other choices.

Your best bet for getting a decent loan or line of credit would be to work on improving your bad credit and getting some steady income.

While loans for unemployed borrowers aren’t impossible to obtain, it’s not likely that you’ll get a good loan amount or interest rate.

References:
https://www.forbes.com/advisor/personal-loans/personal-loans-for-unemployed/
https://www.myfico.com/credit-education/what-is-a-fico-score