Can You Get Approved For a Personal Loan If You Don’t Have a Job?

Written By
G. Dautovic
July 07,2023

If you're unemployed and need some extra cash, taking out a loan is a tempting proposition. But can you get a loan without a job to back it up? The good news is - you can. The bad news? It may not be worth it.

You also need to consider some things before taking out a personal loan as an unemployed person. This blog post will explore those options and help you decide if a personal loan is the right choice for you.

Should You Take Out a Loan if You Don't Have a Job?

There's no easy answer when it comes to getting a personal loan without a job. On the one hand, it can be a great way to get the money you need in a pinch. However, it can also put you at risk of getting into debt that you may not be able to repay.

Ultimately, the decision of whether or not to get a loan while unemployed is one that you'll need to make based on your unique circumstances. If you're confident that you can repay it and have a plan for doing so, then it may be worth considering. Otherwise, it's probably best to steer clear.

What Do Lenders Look for To Assess if You Qualify for a Loan?

It is possible to get a loan without being employed, though it may not be easy. When applying for a personal loan, lenders will usually consider several criteria to assess your credit risk and whether you can repay the money. Your income, debt-to-income ratio (DTI), payment history, and credit score are all examples of important factors that lenders look at during the approval process.

Income Verification

Before offering you a loan, many lenders demand proof of your income, such as previous tax returns, bank statements, and pay stubs. A steady income will give them confidence that you can repay the money you borrow.

If you don’t have a job but have other stable income sources that can cover your monthly expenses, you might be able to use those to qualify for the loan. The following alternative income sources might be used to pay off debt:

  • Child support or alimony
  • Disability benefits
  • Social Security payments
  • Rental property
  • Veterans Affairs benefits
  • Income from your spouse or partner
  • Unemployment benefits

Alternatively, you may show proof that you have a pending employment offer, which can help convince the lender that your income will improve soon.

Other Assets

If you don't have an alternative source of annual income, some lenders may require that you have another asset, such as a car or property, to use as collateral for the loan. These are the most common types of assets people use to secure a loan while unemployed:

  • Home equity: If you've built up equity in your home, you can use it as collateral for a loan. Keep in mind that you risk losing your home if you default on the loan.
  • Savings and investments: You can use savings accounts, bank accounts, certificates of deposit (CDs), or investments like dividends, stocks, and bonds as collateral.
  • Trust fund: A trust fund is an asset you can use as collateral for a loan if you’re unemployed.
  • Retirement or pension account: You can use assets in a 401(k), 403(b), or IRA as collateral, but keep in mind that you may have to pay taxes and penalties if you withdraw the money early.
  • Borrowing against life insurance: You can borrow against the cash value of a whole life insurance policy if you need to.
  • Artwork and jewelry: If you own paintings, sculptures, or other pieces of art, you can use those as collateral for a loan as well. The same applies for any gold, diamonds, or other precious jewelry you might own.

Debt-to-Income Ratio

Your DTI is another important factor that lenders will consider when considering your loan application, regardless of your employment status. This ratio is calculated by dividing your monthly debts by your gross monthly income. A high DTI can indicate to lenders that you may have difficulty repaying a loan.

For example, let's say you have a gross monthly income of $2,000 and monthly debts of $500. This gives you a DTI ratio of 25%. Most lenders prefer to see a DTI ratio of 40% or less, but some may be willing to consider your application, though the terms likely won’t be very favorable.

Credit History

Your credit history is another important factor that can impact your loan application. Lenders will look at your credit report to see how you've handled debt in the past and determine the risk of approving your application. If your credit report shows a good credit history, this can work in your favor and make it more likely to be approved for a loan, even when unemployed.

Credit Scores

Your credit score is a number that represents your creditworthiness. Credit scores are based on information in your credit report and can range from 300 to 850. The higher your score, the more likely you are to be approved for a loan.

Having a low score on your credit reports can make it more difficult to get approved, as a bad credit score is usually an indication to lenders that you may have difficulty repaying a loan without a job (or even with one, in fact).

If you don't have a job but you're fulfilling at least the minimum credit score requirements, you can start by looking into loans available to people with a low credit score. 

There are a number of lenders who offer loans to people with subprime credit, so you may still be able to get one even if you don't have a perfect score.

How to Get a Loan Without a Job

There are a few things you can do to find a personal loan without a job. The first is to have some form of collateral. This can be in the form of property, savings, or even a vehicle. If you have something of value that can be used as collateral, you may be able to qualify for a loan.

Next, you'll need to find a cosigner willing to sign the loan agreement with you. The cosigner will be responsible for repaying the loan amount if you default on the payments. Finally, you'll need to shop around for lenders willing to give you a loan without employment verification.

Once you've found a lender, you'll need to fill out a loan application and agree to the terms of the loan. If you're approved, you'll be able to get the money you need, even if you’re currently unemployed.

Types of Personal Loans for Unemployed Borrowers

Personal loans come in various shapes and sizes, but there are some basic things to know about each one. Here are some key facts about the most common types of personal loans:

Secured Loan

A secured loan is where you put up some form of collateral, such as your house or car, against the loan so that if you don’t have the funds to pay the lender, they’ll still get their money’s worth.  Getting a secured loan can be easier than getting an unsecured one because the lender has some form of security against which to lend the money. However, if you can't repay a secured loan, the lender can take your collateral.

Unsecured Loan

An unsecured loan doesn't require any collateral, but as a result, they usually have higher interest rates than secured loans. They may also be more challenging to get if you don't have a job. An unsecured loan could be a good option if you meet the lender's credit requirements and can document your income.

Cash Advance

Cash advances can be obtained through your credit card. You can get a cash advance by using your credit card at an ATM or getting a cash advance check from your credit card issuer. The interest on cash advances is usually higher than the rate on purchases, so be sure to pay it off as soon as possible.

Payday Loan

Payday loans are short-term, unsecured loans typically used to get through a financial emergency. They can be difficult to qualify for and can come with high interest rates and fees, as payday lenders are typically not regulated by state law. Because of this, you should only opt for payday loans as a last resort.

Debt Consolidation Loan

Applying for a debt consolidation loan can be a good option if you have a lot of debt and can’t keep up with the payments. Debt consolidation loans can help by consolidating all your debts into one loan with one monthly payment.

Risks of Getting Personal Loans Without a Job

It is very dangerous to get a personal loan without having a job because if you can't repay the loan, you may end up losing your collateral or damaging your cosigner's credit rating. Also, the interest rates on personal loans and origination fees are often quite high, so you could end up paying a lot of money in interest if you can't repay the loan quickly.

Finally, defaulting on a loan can damage your own credit score, making it harder to get approved for loans in the future.

Before taking out a loan while unemployed, make sure you are aware of all the risks involved. It's essential to have a plan for how you will repay the loan before you even apply. Otherwise, you could end up in an even worse situation than the one that forced you into getting a loan.

If a lender determines that you are a risk, you may find it impossible to get a decent interest rate or a longer repayment period. Here are some of the most significant risks you can face when taking out personal loans as an unemployed person:

  • You could lose your home if you missed payments on a secured loan.
  • You might have to put up collateral, such as a car or home, to get the loan.
  • You could end up in debt if you can't repay the loan.
  • You might have to pay several fees if you can't repay the loan.
  • You could damage your or your cosigner's credit rating if you can't repay the loan.
  • You could be sued if you can't repay the loan.

As you can see, there are a lot of risks involved in taking out a loan without a job. However, if you're in a situation where you need the money and can't get a loan any other way, it might still be worth considering. With responsible borrowing, personal loans can be a great way to get the money you need. But if you can't make the payments, they can quickly become a nightmare.

Alternatives to Getting a Loan Without a Job

There are a few alternatives to getting a loan if you don't have a job and are seeking financial relief. Each option has its own set of pros and cons, so be sure to know what you’re getting yourself into before making a decision.

Using a Credit Card

If you have a good credit score, you may look into credit card issuers that offer credit cards with a 0% APR introductory offer. This can be a great way to finance a large purchase or consolidate debt. Just be sure you can pay off the balance before the intro period ends, or you'll be stuck paying interest at the regular APR.

Getting a Payday Alternative Loan from a Credit Union or Community Bank

If you have a bank account with a local credit union or a financial institution, you may be able to get a payday alternative loan (PAL). PALs are small loans with terms of one to six months and can have an APR of 28% or lower. They're a much better option than traditional payday loans, which can have APRs of 300% or more.

Borrowing From Family or Friends

If you need a loan and don't have a job, you may be able to borrow from a family member or a close friend. This is usually the best option if you’re trying to avoid harsh interest rates. Just be sure you can repay the loan in a timely manner - you don’t want to strain your relationship with friends or family over money.

Car Title Loans

A title loan is a loan that uses your car as collateral. These loans have a short term and come with high interest rates, and if you can’t make timely payments, the lender can repossess your car. Getting a title loan is definitely one of the riskier options available, and these types of loans should be avoided if at all possible.

Pawn Shop Loans

A pawn shop loan is when you take an item of value to a pawn shop and give you a loan based on the item's value. You can usually get your item back if you repay the loan amount in full, but if you can’t, the lender will keep it.

Home Equity Loans or HELOCs

If you own a home, you may be able to get a home equity loan or a home equity line of credit (HELOC). This can be a good option because HELOC loans operate similarly to credit cards, meaning that you can borrow money whenever you need it and pay interest only on the amount of money you borrowed. But keep in mind that if you can’t make the payments, you could lose your home.

Certificate of Deposit (CD) Loans

CD loans are secured loans that use your certificate of deposit account as a backing for the loan. CD loans are usually easier to qualify for when compared to other loans, and interest rates are generally lower than with unsecured loans.

What if You Don’t Qualify for a Loan?

There are a few approaches to take if you don't have a steady income source and fail to qualify for a personal loan as an unemployed person.

  • Save up: One way to be prepared for financial hardships is by saving up. This can help dampen the blow of a job loss and act as a safety net in an emergency.
  • Build up your credit: Another way to prepare is by building up your credit score. This can give you more options if you do need to take out a loan in the future. There are a few things you can do to improve your credit score, such as paying your bills on time and keeping your credit utilization low.
  • Create a budget: If you're unemployed, it's imperative to create a budget. This can help you stay on track with your finances and make sure you're not spending more than you can afford.
  • Look for government assistance: If you're unemployed, government assistance programs may be available to help you with your finances. These can vary depending on where you live, but some examples include food stamps and unemployment benefits.


It is crucial to explore your options when you are unemployed and in need of a loan. There are many options available, but each comes with its own set of risks. Be sure to carefully consider your situation before taking out a loan, and always ensure that you can repay the loan in a timely manner.


Is it hard to get a loan when unemployed?


It can be challenging to get a loan while unemployed because most lenders will consider you a high-risk borrower. This means that you may have to pay a higher interest rate or provide collateral in order to get the loan. You may also use alternative sources of income like child support, alimony, or disability payments to qualify for a loan.

What is the best way to get a loan when unemployed?


The best way to get a loan when you are unemployed is to save up money in your bank accounts beforehand so that you can act as your own lender. This can help you avoid the high fees that come with other loan options. Additionally, it is vital to create a budget so that you can be mindful of your spending habits and ensure you can afford the monthly payments.

If I can't qualify for a loan, what are my other options?


If you can't qualify for a loan, there are a few other options available, such as government assistance programs, borrowing from a family member or friends, getting a home equity line, or using your credit card. However, these options can be risky and should be carefully considered before taking out a loan.

What are some risks associated with taking out a loan?


Most risks are associated with the inability to make the loan payments, which could lead to defaulting on it. This can result in damage to your credit score, wage garnishment, and seizure of assets. Additionally, if you take out a secured loan, you could lose the collateral if you can't make the payments.

Can you get a loan without a job and low credit?


Getting a loan with a low credit score can be difficult, as your report from the credit union is one of the first things lenders will look into before assessing the risks of approving your application. A low credit score indicates that you may not be able to fulfill your loan obligations, so you’ll likely get more unfavorable terms if your credit rating is low.

About author

I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.

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