A strong economy is scant consolation if you find yourself struggling with unemployment. Millions of Americans are out of a job right now and are contending with having enough money to live on. Some turn to loans to get them over the rough patches, but what do you do if you are unemployed and have bad credit? Believe it or not, you do have options, and we’ll explore loans for the unemployed with bad credit.
Before you apply for a loan, consider whether you’ve exhausted your other options. These include collecting unemployment insurance, welfare benefits, and help from family and friends. If you decide you need a loan, you’ll have a menu of choices, such as personal loans, cash advances, and lines of credit. We’ll show you the best online personal loans available right now if you’re unemployed and your credit is bad, plus we’ll discuss alternative types of loans.
Best Online Loans for People Who Are Unemployed with Bad Credit
Through its online network of lenders, PersonalLoans.com offers loans ranging from $1,000 up to $35,000 depending on an applicant’s eligibility. To qualify for a personal installment loan, borrowers must have a credit score of at least 580.
There is no fee to get matched with lenders through PersonalLoans.com. Interest rates vary by lender and typically span anywhere from 5.99% to 35.99%.
Repayment terms also vary, but borrowers can expect to repay their loan between 90 days and 72 months. Borrowers with a higher credit score will generally receive more flexible options and a more favorable interest rate.
While you don’t need to be employed to apply for loans, you must make at least $2,000 per month. This income can come from various sources, including Social Security or disability benefits.
Upstart is an online lender that offers personal loans to people with fair credit or little to no credit history. The company also accepts a wide variety of income sources besides regular full-time employment.
As long as you bring in at least $12,000 per year in income, you may be able to qualify for a personal loan from Upstart. This income can come from a range of sources, including spousal support payments, a trust, or disability payments.
You can use an Upstart personal loan to pay for anything from college tuition or medical bills to home improvement and debt consolidation. Because Upstart works with individuals with little to no credit history, it’s a good option for younger people who are new to the world of lending.
On the downside, Upstart requires a minimum 620 credit score, and it won’t accept applicants with a recent bankruptcy or more than six inquiries on their credit report within the last six months. According to the company’s website, however, it may accept borrowers who don’t have enough credit history to generate a FICO score.
In many cases, borrowers receive their funds as soon as the next day. If you’re taking out a personal loan to consolidate debts or pay off your credit cards, Upstart will also pay the loan funds directly to your creditors.
Upstart’s fees vary depending on a borrower’s creditworthiness. Loan origination fees can be as little as zero and as high as 8%.
Borrowers with bad credit can expect to pay more in interest. Interest rates start as low as 7% and go all the way up to 35.99%.
Loan amounts and terms vary by state. In the majority of states, the minimum loan amount is $1,000, with loans capped at $50,000.
MoneyMutual is a loan aggregator rather than a direct lender. Instead of financing loans itself, it allows borrowers to submit their information online and get matched with lenders that might be willing to offer a loan.
This means that terms and interest rates will vary depending on the individual lender. However, there are some minimum requirements for all loans funded through the MoneyMutual system.
For example, while you don’t need to be employed to get a loan, you must have an income source that brings in at least $800 per month. Additionally, the maximum loan amount is $2,500, so MoneyMutual isn’t a good option for someone who needs to finance a large purchase.
Also, it’s important to note that MoneyMutual is an online payday loan lender. These types of lenders are known for charging some of the highest interest rates in the industry, so it’s crucial to read through all the fine print before signing up for a loan.
BadCreditLoans is another loan aggregator, which means it doesn’t actually do any lending. Rather, it gives borrowers a way to fill out a single application and connect with several different lenders.
While some applicants may be eligible to borrow up to $5,000, people with truly poor credit scores might be limited to a $1,000 loan. You don’t need a job to apply, but you must have some source of regular income.
The minimum loan amount for a loan through BadCreditLoans is $500, and loan repayment terms vary between three months and three years. The BadCreditLoans system is free to use, and you won’t incur a hard inquiry on your credit report until you move forward with a loan application from a third party lender.
Like other loan marketplaces or aggregators, CashUSA connects borrowers with third party lenders willing to work with people who are unemployed and have bad credit. Depending on their creditworthiness, borrowers can get a loan for up to $10,000.
You don’t need a job to apply for loans, but you must have a source of income that generates at least $1,000 per month. In addition, lenders in the CashUSA network typically don’t require a certain credit score to qualify for a loan.
As the CashUSA website states, there is no fee to apply for loans through the site. Terms vary depending on the individual lenders you match with, with interest rates ranging from 5.99% to 35.99% and repayment terms varying from 90 days to 72 months.
CashUSA offers an example of what a typical loan from one of the lenders in its network might look like. For a $1,500 loan paid back over two years at a 7.9% interest rate, your monthly payment would be $67.77 for a total repayment amount of $1,626.54.
Whether your credit score is in fair shape or less than stellar, you may be able to qualify for a personal loan with LendingPoint. The lender offers quick funding and relatively low loan amounts but also has an origination fee and shorter-than-average repayment terms.
|$2,000 to $25,000
|9.99% to 35.99%
|Minimum credit score
|Time to receive funds
|As soon as one business day
Personal Loan Alternatives for Unemployed People
In some cases, an individual with bad credit and no job might be unable to qualify for a personal loan through a bank or other lender. In other situations, the person can qualify but the loan terms are predatory or the interest rate is too high.
If you’re struggling to get approved for a loan through traditional means, it’s a good idea to take a look at your other options. Here are some alternatives to keep in mind.
- Peer-to-peer lending – A relatively new idea in the lending marketplace, peer-to-peer lending got its start in 2005. With peer-to-peer lending, borrowers get a loan from a group of individuals or investors rather than a bank, credit union, or other traditional lender. Lending Club is one of the oldest and biggest names in the peer-to-peer lending world. Depending on their creditworthiness, borrowers can get personal loans for as much as $40,000, although people with low credit scores might encounter more restrictive terms and conditions.
- Credit card cash advance – In some cases, your credit card can be a way to get fast access to cash. If you don’t have a credit card, you might be able to qualify for one that offers cash advances. However, it’s important to check the fees and interest rates before you tap your card for a loan. If you can’t pay back the advance within a reasonable amount of time, you can quickly rack up interest on your card.
- Loans from friends or family members – If you know someone who’s financially comfortable, you might be able to arrange a no-interest or low-interest personal loan.If you go this route, however, be certain you can afford the loan. Avoid any strained relationships or hard feelings by keeping up with the payment schedule.
- Home equity loan – If you own a home, you may be able to tap into your equity. While these loans tend to come with lower interest rates, the downside is that your home serves as collateral, giving the lender the right to foreclose if you default.
- Car title loan – With a car title loan, you use your vehicle as collateral to secure the loan. However, these kinds of loans are notorious for charging high interest rates, and you risk losing your vehicle if you can’t pay back the loan.
- Pawn shops – Pawn shops offer loans by holding your personal property as collateral and charging interest on the money you borrow.Because these loans tend to come with very high interest rates, however, they’re generally not the best option. Worse, you risk losing your property if you can’t pay back the loan.
- Get someone to cosign – If you can’t qualify for a personal loan on your own, you can try getting a cosigner. If you go this route, however, make sure your cosigner understands that they will be responsible for the balance if you default.
When you’re in a bind and need quick access to cash, it can be tempting to sign with the first lender willing to take you on. Before you commit to any form of personal lending, however, it’s important to make sure you understand all the terms and conditions, including the interest rate and any penalties and fees.
How Can I Get a Personal Loan While Unemployed?
The four loan-matching services we review in this article all offer personal loans to unemployed individuals, even those with bad credit. The catch is you must show some form of regular monthly income. Typical sources include Social Security, disability benefits, pensions, annuities, and unemployment insurance.
The procedure for getting these loans is straightforward. First, you visit one of the loan facilitator websites and fill out a loan request form.
Our top-rated site is MoneyMutual, but all four follow the same basic procedure. If you meet the minimum requirements, the website will alert its network of lenders to your request.
nterested lenders will then contact you and invite you to fill out their loan application. These applications ask about your monthly income, including its source. If your income meets or exceeds the lender’s minimum requirement, you may qualify for a loan.
Because these websites serve consumers with poor credit, you should expect to pay a high interest rate to secure the loan. High fees may also apply, however, these are some of the few sources providing non-collateralized loans to people who are both out of work and have bad credit.
As long as your monthly income is steady and high enough, you stand a decent chance of getting a personal loan. If you need a large loan, consider PersonalLoans.com, which offers loans up to $35,000 to consumers having a credit score of 580 or higher.
How Can I Get a Loan without Proof of Income?
The loan matching services we review here all indicate you must provide some proof of income to get a loan. This could be a pay stub, a series of canceled benefit checks, or proof of regular annuity or pension income. If you can’t provide any proof of income, you’ll have to look to an alternative lending source.
Typically, secured loans do not require you to provide proof of income. That’s because you have to put up collateral to obtain a secured loan.
The lender knows it can seize the collateral and sell it if you default on your loan. That makes secured loans much less risky, which may entitle you to a lower APR and fees. The downside is you will lose your property if you default on your loan.
The usual forms of collateral that lenders routinely accept include your home, car, cash, and securities. For cars and homes, you can only borrow to the extent that you have equity in the property.
Equity is the value of the property that exceeds any existing loan balance on it. A HELOC is a popular way of unlocking equity in your home. A car title loan lets you cash out your equity in your vehicle, but typically has higher rates and fees than a HELOC.
If you have a savings or brokerage account, you may be able to pledge the account as collateral for a personal loan. You won’t be able to withdraw the collateral until you repay the loan. These too have favorable interest rates and lower fees.
Loans for Unemployment with Bad Credit FAQs
Can I get a loan with bad credit?
You can get a loan with bad credit from the lenders that are willing to work with you. If you have bad credit, some lenders look at other factors to make a decision on whether they’re willing to lend you money. You’ll probably need to show your income and banking history in place of your poor credit history to qualify. Keep in mind that the cost of a loan is usually related to how much risk you may be to the lender. Bad credit loans are often more expensive than a regular loan, so make sure you’re able to pay off the loan as quickly as possible to avoid getting into further financial trouble.
How to improve your credit to get a better loan?
The higher your credit score, the better terms you may receive for your loan. Don’t be discouraged if you fall into the poor or fair credit score category — there are some steps you could take to improve and build your credit:
Order your free credit report and check it for errors. Mistakes happen — if you find a company has reported you for late payments or for a loan you never applied for, you can dispute the hit on your credit file. The credit bureau will investigate the error and remove it if it doesn’t belong to you.
Keep paying your bills on time
Make sure you’re paying your bills on time to ensure you don’t get reported to the credit bureaus. If you’re having trouble making your payments on time, contact your creditors to ask for an extension or a reduction on the payment due so you can continue making your payments on time.
Lower your credit utilization ratio
If you have any credit cards, make sure that you keep the month-to-month balance lower than 30% of your total credit line. Credit reporting bureaus tend to reward accounts that keep a credit utilization ratio below this 30% threshold. For example, if you have a credit card with a $10,000 limit, don’t spend over $3,000 on that card or allow the month-to-month balance to exceed that.
Can you get a loan if you’re unemployed?
Employment is one of the many important factors lenders take into account when you apply for a loan. If you’re unemployed, getting a loan can be challenging — but it may not be impossible. If you’re unemployed and in need of a loan, you’ll have to show a high credit score and a source of income such as child support or social security checks to have a shot at being approved. If you don’t have either of those, securing a loan may prove even more challenging.
Is there a risk in bad credit loans?
When you take out a loan there is always some level of risk involved — whether you have bad credit or not. However, if you take out a bad credit loan, the risks can be a bit more steep. Beware of scammers and predatory lenders in particular.
Predatory lenders specifically go after those who have a hard time getting loans, so it’s best to always do research on a lender offering bad credit loans. Those taking out bad credit loans should also be aware that if they default on a loan, the lender can seize your collateral. This can result in an even bigger toll on your credit score, so be sure you’re in a stable position to pay off any loan you take out.
Super high interest rates are another risk. If your credit score is very bad, you may be offered a loan with a sky-high interest rate — which can sometimes be as high as 200% or 300%. Unless you’re in dire need of cash, you may want to steer clear of those loans. They’ll be tough to pay off, and there’s a lot at risk if you can’t.