How To Get a Loan Without a Job

an approved loan application

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When you’re unemployed, you might struggle to pay your bills, and then consider taking out a personal loan to cover your expenses until you secure a new job.

Fortunately, you can get a loan when you don’t have a job, but you may have to jump through some extra hoops.

Lenders consider many factors before lending money to someone, and you might have other sources of income that will qualify you for a loan.

In this article, we’ll discuss how to get a loan without a job and other options to consider if you can’t get a loan.

Let’s jump right in.

How to Get a Loan Without a Job

If you don’t have a job, you still have several options to help you get a loan.  Below is a list of the most common ways.

Use Other Sources of Income

You may have other sources of income that a lender will consider if you don’t have a job. For example, all of the following can count as income.

  • Alimony
  • Some disability income
  • Unemployment benefits
  • Dividends and interest
  • Payments from Social Security
  • Pensions and annuities
  • Child support

Provide documentation of these sources of income to potential lenders, and this may help you get approved for a loan when you’re unemployed.

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Put Up Collateral

A secured loan is a loan that has an asset backing it up that the lender can seize to cover their loss if you stop paying. This is called collateral. 

On the other hand, an unsecured loan is a loan that has no collateral making the loan riskier for the lender.

If you can’t get an unsecured loan, consider getting a secured loan where you offer something as collateral. Not only might this make a lender more agreeable to loan you money, but you may also get a lower interest rate.

Increase Your Credit Score

You’re more likely to be approved for a loan with a higher credit score. A lender may overlook that you’re unemployed if you have some income from other sources and good or excellent credit.

Raising your credit score takes time though having a higher score will help you qualify for loans with better terms and lower rates.

Get a Cosigner

Having a cosigner can help you get a loan when you aren’t able to get approved by yourself. When you have a cosigner, the consignee assumes responsibility for the loan if you fail to pay. 

The lender will check the consignee’s income and credit history to determine if they’ll approve the loan.

A potential drawback of getting a cosigner is that if you stop paying your loan and your cosigner has to take over, it may harm your relationship with them, especially if your cosigner was expecting you to pay back the loan on your own.

Get Your Free Credit Score With Credit Karma

Credit Karma offers free credit scores, reports, and insights.

Get curated offers based on your credit profile to find credit cards, loans, and more.

Affiliate Disclosure: This is an affiliate link, and we may earn a small commission if you click and make a purchase. This helps our site grow and provide you with more content. Read how we make money here.

Pay Down Existing Debt

If you have some income, but your debt-to-income (DTI) ratio is too high, consider paying down some of your debt so that you reduce your DTI.

According to Investopedia, a good DTI is below 36%, and having a DTI above 43% may prevent you from getting a loan entirely.

With that in mind, using what income you have to pay down debt may help you qualify for a loan when you’re not working.

Get a Cash Advance

Cash advances are one way to get money from your credit card, though cash advances often come with fees and high interest rates, so it’s best to pay them back as soon as possible. 

On top of that, money borrowed from cash advances accrue interest immediately, unlike standard charges made to your credit card.

Ask a Friend or Family Member for a Loan

If you’re struggling to qualify for a loan from a traditional lender, you could consider asking a friend or family member for a loan. 

Whenever you borrow money from friends or family, it’s a good idea to make it a formal agreement so that both parties agree on how much is being borrowed and what the repayment terms are.

Relationships can be hurt because of money-related issues, such if you don’t pay the person back, so be sure to discuss the loan fully with the other person before borrowing money from them.

Borrow From Your 401(k)

You can borrow money from your 401(k) as long as you pay it back in five years. If you take longer, you’ll have to pay a penalty.

This may not be your best option, as while you may help your situation with money right now, you’re taking money away from your retirement account that would be growing to fund your retirement.

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Consider a HELOC or Home Equity Loan

One option is to take a loan out against your house. This is when you use your home as collateral for the loan. While this can be an effective way to get a loan when you’re not working, failing to repay the loan could mean losing your home to foreclosure.

What To Do If You Don’t Qualify For a Loan

You may end up not qualifying for a loan, but that doesn’t mean you’re without options. Here are some steps you can take if you need money and can’t get a loan.

Lower Your Living Expenses

Lowering your living expenses means you’ll need less money each month, which may make it easier to get by without a loan when you’re unemployed.

Here are two simple ways to save money:

  • Trim: Sign up for Trim and let Trim lower your cable, internet, and phone bills by up to 30%, identify and cancel unused subscriptions, and negotiate your interest rates. Trim is mostly free in that you only pay a small portion of what Trim saves you.
  • The Zebra: Head over to The Zebra, a free insurance comparison website. Shop auto, home, renters, life, and business insurance all in one spot. You could save hundreds per year in just a few minutes.

Consider Using Money in Your Emergency Fund

An emergency fund covers you when life throws a financial curveball, and not having a job might be considered one of those curveballs.

If you can’t get a loan, you might have to dip into your savings a bit, and that’s what your emergency fund is there for.

Look For Other Ways to Make Money

You might not be able to get a job right away, but there are other ways to make money. For example, you might be able to come up with a side hustle that puts some cash in your wallet. 

Just be wary of things that look too good to be true.

Additional Tips to Qualify for a Loan When You Have No Job

If you’re struggling to qualify for a loan because you don’t have a job, consider the following.

Check Your Personal Loan Rate in Minutes

Get a personal loan from Upstart to fund debt consolidation, a new business, home improvements, paying off medical debt, and more.

Check your rate in minutes without affecting your credit score.

Affiliate Disclosure: This is an affiliate link, and we may earn a small commission if you click and make a purchase. This helps our site grow and provide you with more content. Read how we make money here.

Write Down All Sources of Income

Create a document, such as a Word document or spreadsheet, that contains all of your income sources.

Add sources such as:

  • Rental income
  • Dividends and interest
  • Child support
  • Alimony
  • Side hustle income
  • Investment income
  • Unemployment benefits
  • Social security income

Once you’ve documented everything, move on to the next section.

Write Down Every Asset You Own

Add to the document every asset that you could potentially sell or put up as collateral.

  • Jewelry
  • Art
  • Automobiles
  • Real estate
  • Stocks and bonds
  • Bank account balances
  • Cash on hand

You may need to get specific items appraised by a professional, and a lender may request that the lender hold those items until your loan is paid off.

Talk To Your Bank

Using your documented income and assets, discuss loan opportunities with your bank. Secured loans are usually an option that may be worth looking into if you have assets but no job and need a loan.

Wrapping It Up

In this article, we reviewed how to get a loan without a job. It’s certainly possible to do so, even if you’ll likely need to go through some extra steps.

Always weigh your options in carefully when shopping around for a loan, as you’ll want to know how each loan works.

Head over to Upstart to apply for a personal loan. You can get your rate in just three minutes, and it won't impact your credit score.

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