26 Dec Can You Get a Loan Without a Job?
No, in most cases, whether it is a secured or unsecured loan you will not be approved for a loan without employment. However, with some types of lending like a guarantor loan, it could be possible. The main thing lenders will be looking for is proof that you can make regular payments on time.
Why can I not get a loan without a job?
Most lenders will be assessing your creditworthiness, and unemployment can affect this.
How creditworthy you are is what will likely lead to your application being either approved or declined. This is because lenders are looking for evidence that you will not have problems paying back the loan should it be granted to you.
If you do not have a job, this suggests providing you a loan could be risky and you may not be able to make repayments.
Other things that affect creditworthiness include:
- How you have handled credit previously (did you make prompt repayment or did you default on any of them)
- CCJs or IVAs on file
- How many loan applications you have made in a short period of time
- Monthly income
- Homeowner status
Criteria for getting a loan
If you are unemployed, are a pensioner, or on benefits, you may be able to get approved for a loan. This is because the eligibility criteria will vary amongst lenders. Criteria for getting approved for a loan may include:
- Credit history: lenders will be looking at how regularly you have made prompt repayments in the past
- Regular income: even if you do not have a job, you will still need to provide evidence of a source of income, or regular income in order to make loan repayments
- Credit score: if you have a good credit score and are unemployed this may increase your chances of being approved for a loan. If not, there are a variety of ways you can improve your credit score.
What if I have bad credit?
If you do not have a job and have a bad credit score, this could greatly reduce your chances of getting a loan.
Nevertheless, it is not completely impossible. There are specialist lenders who provides loans for bad credit.
These types of loans may require you to pay higher levels of interest in order to help the lender mitigate risk lending to you.
What if I don’t qualify for a loan?
If you have recently applied for a loan whilst unemployed and your application was declined, there are options.
A popular alternative for many is getting a guarantor loan instead.
What is a guarantor loan?
A guarantor loan is typically used by those who have a bad credit score. The main borrower is able to access a loan and has a nominated individual (usually a close friend or family member) ‘guaranteeing’ the loan.
This means that should the main applicant (the person who will be the recipient of the loan) be unable to pay, the guarantor accepts responsibility for paying it back.
This could be because the main borrower has fallen into financial difficulty or simply refuses not to pay.
Once the 14-day cooling-off period has finished on the guarantor loan contract, it is not possible to stop being a guarantor. This is why it is vitally important that both parties fully understand how a guarantor loan works.