Getting a loan can help in many ways when you are in a financially troubling situation, however, for some getting a loan is not as easy as it is for others. Many people who need a loan cannot get a good deal on one due to their credit score, or even being unemployed.

So, what can you do if you are unemployed? Well, the bad news is that you may not be able to secure a loan if you are unemployed. A majority of lenders will want you to have a permanent and steady flow of income, as this ensures you have the funds for repayment.

However, this is not the case for everyone. Instead, you could find yourself being able to get a loan from one or two lenders even if you are unemployed, yet the loan will not be quite as good as if you were employed.

So, how does this all work? Are you stuck vying for no credit check loans or do you have other options?

Can You Get A Loan While Unemployed?

You can still qualify for a loan, even if you are unemployed. However, if this is the case for you, you will need either solid credit, or another source of income to support you in this.

Unemployment can come unexpectedly, or by choice, as would be the case with retirement, lenders will still sometimes consider lending to you, so long as you are able to persuade them that you will be capable of making regular payments on time.

This is the lender’s main concern.

A lender will typically want to see three things on an application. These include a good and strong credit history, a good credit score, and a regular income.

A strong credit history means that you have a good history of paying repayments on loans or credit back on time with no or very few late payments, especially recently.

Your credit score should be as high as you can get it, the higher, the better. Some lenders will have a minimum score that they accept. The higher your credit score the lower your APR, the lower your credit score the higher your APR.

Lenders also need to know that you can make repayments each month. Technically it does not have to be from a paycheck, however, you should have at least one source of reliable income that will be enough to cover expenses on a monthly basis and to cover loan payments.

What Should You Be Thinking About?

There are many types of loans you can get, however, the ones that are most popular are probably personal loans. With these loans you should be considering the same things you should be considering with any other loan type.

There will be short and long term financial factors and consequences of taking out a loan that you should be wary of.

Here are some things you should be thinking about.

Can You Make Payments On Time?

Firstly, if you are unemployed, or even if you are employed, being able to make on time payments is a big deal.

You should always think about if you can make the minimum payment on time every time. Late payments won’t just affect your credit score, but they can come with late fees as well. If you cannot pay the loan back, your lender may even go further.

This means debt collection agencies, and a negative credit report, if your loan is secured they can take your property, or you can even get sued.

Understanding these factors is very important to ensuring you get what you need out of a loan and that a loan won’t be a bad idea for you.

What Are The Loan Terms & The Risks?

It is wise practice to make sure that you understand the terms of the loan. Read the fine print and note the important stuff. This includes the payments, fees, penalties, interest and so on.

However, also be aware of the risks, consider the best case scenario and then consider the worst case scenario, and do not jump in unless you are happy with both.

Consider if this loan is really the best thing for you, what might happen if you are unable to make payments, and the interest rate, what it will mean for your actual total payment.

Do not forget to consider the consequences if you do not pay the loan back, could you end up looking at losing your home or car?

What Are Lenders Thinking?

Remember that every lender will have different credit policies that they will use to figure out if the borrower is most likely to repay the loan. This is a risk assessment.

So, while you may not have employment, some lenders accept alimony, disability payments, unemployment benefits, social security payments, pensions, child support, interest or dividends and so on.

What Types Of Personal Loan Can You Get?

If you are employed you could get a secured or unsecured loan. Secured loans are linked to an asset of yours, and you do risk losing that asset if you do not pay the loan back in full. Unsecured loans do not have this risk but usually have a higher interest rate.

You could also get a payday loan (although this is risky) as well as a cash advance or debt consolidation loans!

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