It is a misconception that loans can be approved only when you have consistent stable income. Financial trouble can hit anybody, and that is the time when you need financial support the most. There are different ways to get a loan if your going when you don’t have income However, each way has its pros and cons:
• Loans via Car title
If your car has no other loan on it, it can be used as collateral for a personal loan.
PROS: No income or credit required and funding is quick, usually within a day.
CONS: The market value of the vehicle has to be higher than the amount of the loan you need. Also, certain lenders might inspect the car before funding so it is important to have your car working properly with necessary documents. Interest rates are higher than standard installment loans.
Similar to title loans in that you need a collateral, a pawnbroker will take any item that has value and lend against it.
PROS: If you don’t have a car, this is another option to get a collateral loan if your unemployed. Loans are made on site, giving you access to quick funding.
CONS: Untill you pay off the loan, that item is kept by the pawnbroker, and if you fail to repay, the pawnbroker will simply sell off the item.
• Loan against life insurance
Taking loans against your life insurance is also a good option in desperate times.
PROS: No credit check and no income needed. Since it’s against an asset, the loan amount is not taxed. Loans on life insurance have a more lenient repayment schedule than other loans.
CONS: If you were to die before paying back the loan, the balance plus interest is taken out of the death benefit given to the beneficiaries. Also, if the loan is unpaid and accrues from the interest, your policy is at risk of termination.
• A financially stable co-signer
A family member/friend who has financial stability and credit history and is willing to be on the loan with you.
PROS: Allows access to loans that that offer much lower fees and interest rates.
CONS: Puts your co-signer at risk, and if the loan gets unpaid, not only will the co-signer be impacted negatively, so will the relationship you have with that co-signer.
• Cash advances
If you own a credit card, you can draw from the issuing bank an advance on the line.
PROS: Does not require any approval process except that you have been on time with your credit card dues. No physical collateral at risk in case of default.
CONS: Requires you to have a credit card with a line of credit large enough for the amount you need. Interest rates and fees are steep.
• No income verification personal loan
Alternative lenders will offer loans if your unemployed without a lot of documentation or proof of regular income.
PROS: Approval is given instantly once the minimal information is processed. Funding is quick.
CONS: Would need to have a standard checking/savings account. Fees are dependent on your credit score and even though you can still get a loan with bad credit and no income, the rates will be higher.
Since these alternative lenders are typically online and/or smaller companies, approval guidelines can be flexible depending on your situation. Application is free so while considering the other types of loans, speaking to these lenders will allow you to weigh the options available.