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Getting a Loan Without a Job
While getting a loan without a job isn’t nearly as difficult as you might think, it often does cost more money. That is because many companies charge a higher interest rate because there is more risk involved with them lending to you. This is why unemployment loans are often done through private lenders instead of traditional lenders.
Traditional lenders prefer employment verification loans because, unlike low income loans or loans that require no verification, there is a much higher chance that the lender will get their money back. Don’t let any of this scare you off though. Many private lenders can help you to get you the money you need and, because many of these loans are short term or open, you can pay them off quite quickly.
Types of Loans You Could Qualify For
When you are looking for a low income loan on one that doesn’t require income verification , keep in mind that you have options on the kind of loan that you can get. There are plenty of different loans out there that can help you if you are unemployed, have bad credit or both.
- Unsecured personal loan. These types of loans can be the most difficult to get but they are also the most powerful. This is because they come with the lowest interest rates out of all of your options. They also have longer terms, meaning you have more time to pay them off. They are also often open, meaning you can put money down on the principal whenever you want. This also saves you money on interest. And, as you make your monthly payments on time, unsecured loans help to improve your credit score.
- Guarantor loans. This means that you have someone who is willing to cosign for you, vouching that you will make your payments on time. In the case that you are unable to make the payments, your guarantor is agreeing to make the payments. Guarantor loans pose much less risks to lenders because they are more likely to get their money back.
- Payday loans. Payday loans are one of the most expensive ways to borrow money. Payday lenders don’t require credit checks and are often used for amounts of $1500 or less. They are only meant for short periods of time and have very high penalty rates if you don’t pay the money back in time. Payday loans also have no positive impact on your credit score, even if you make all of your payments.
- Auto title loans. This type of loan is a secured loan that uses a paid vehicle to take out money. The thing with auto title loans is that if you don’t pay them off you could lose your vehicle since it is considered collateral. That being said, if you are in need of money, these loans allow you to access up to $25,000 depending on your vehicle's value.
Before You Apply
Just like with any loan, before you start applying, it is important to do some research. It is important to get a sense of where you stand who you would likely get approved with. This can help limit the number of credit checks you get, since every time you get a hard credit check done it hurts your credit between 5-15 points. It can also be a red flag to lenders having a lot of credit checks on your report.
- Know your credit score. There are a few simple ways that you can find this out. There are websites like Credit Karma (Transunion) and Borrowell (Equifax) that allow you to keep an eye on your credit score. While these websites aren’t always 100% accurate, they are in a ballpark range that can give you a really good idea of your standing. It is important to keep in mind different companies will use different credit bureaus so it is a good idea to keep track of your Transunion and Equifax scores.
- Shop around for lenders. Even though you likely won’t get approved by a traditional lender, you still have options with private lenders. Take a look at the types of loans they offer as well as if the loans are open or closed. Getting an open loan allows you to put any extra money on the loan without any penalties. You can do this by reading up on loan companies that provide loans without employment verification or using loan comparison sites.
Once you have done some research on the different types of loans, then you can start applying. Keep in mind that, even though you aren’t currently working, your credit score will still make a difference. While many of these companies will still give you money with bad credit scores, you are likely to get a lower interest rate or a higher loan amount showing a more positive credit history. This is why you want to try a loan that will have a positive impact on your credit score. That way when you need a loan again, you have more positive history on your file.
What You Need to Qualify
In order to qualify for this type of loan, there are a few things you will need to show in order to finalize your application.
- Proof of identity. This means they are going to have to show some form of government picture ID. Provincial health cards are normally not accepted so it is best to provide a provincial ID card, a driver's license or a passport. In some cases you may also be asked for your SIN number in order to verify your credit check.
- Proof of income. Even if you are not currently working, if you are receiving any sort of income such as EI (Employment Insurance), WCB, Pension, or disability. There are also many other forms of income that are accepted as well. Keep in mind, some places will require a minimum income amount (employment or not). This is normally anywhere between $1200 to $1500, but could be higher or lower depending on the lender.
- Bank statements. Most lenders will require up to 90 days on bank statements as well as a direct deposit form. This allows them to see how much money is coming in and out of your account every month. It also allows them to set it up so they can deposit the loan directly into your account, and withdraw your monthly payments on a set date every month for an agreed upon term.
Easiest Loan to Get While Unemployed
The easiest type of loan to get while unemployed is a payday loan. These loans do not require a credit check but they also have no positive impact on your credit score. Interest rates on payday loans can go as high as 400% and often are required to be paid back in just a few weeks. The thing with payday loans is that once you get one, it can be very easy to get into a payday loan cycle. Often, borrowers don’t have the money for the loan repayment right away so they end up taking out another payday loan to cover the cost of the first one and so on. That being said, it is an option if the other choices don’t work out for you.
Getting a Loan in 1 hour
The great thing about working with a private lender is that you can often get the money that you need much faster. Getting a loan in an hour is completely unrealistic but it does depend on the lender you are working with.
When it comes to getting a payday loan, you can often get those in just 5 minutes so they can be good if time restaurants are an issue. If you are looking for a personal loan with a longer term then applying online can be one way to ensure you get the money faster. That being said, in order to ensure that you get the money faster then there are a few things you can do to speed things up.
- Apply during business hours. This allows someone to get your application immediately and start working on it.
- Make sure the online loan application is filled out correctly and all documents are provided. If you do this then you are more likely to get a faster approval. The application, sometimes referred to as an online loan request form, can then be submitted for approval without any wait time, getting you your funds faster.
- Verify your banking details online. Many online lenders allow you to verify your bank account details online. This saves you time from dealing with the banks and they get the information almost instantly. It also provides them with your direct deposit information so you don’t have to send that separately.
Even while doing all of these things correctly, it is important to keep in mind that all of this is based on approval. While there are a lot of lenders that will lend if you are unemployed, they often like to see some form of alternative income and do pay attention to your credit. Because of that, there are some extra costs that come with these kinds of loans.
Apps that Let you Borrow Instantly
For any lender that advertises you can get money instantly, it is important to be wary. There are scams that target those looking for money fast, but those that are legitimate often charge extremely high interest rates. The most common apps that let you borrow money instantly are payday loans. Instead of having to go in, you can apply and get a payday loan directly from the app.
The Cost of Unemployment Loans
Determining the exact cost of these types of loans is difficult. It all depends on your credit score, if you have alternative sources of income and how much you are receiving, as well as any current debts that you already have. There are certain costs that do come with these loans, regardless of the individual factors.
- High interest rates
- Shorter lending terms
- Smaller loans
- Higher lending fees
Lenders are taking a much higher risk by lending to those who don’t have steady income, bad credit or a combination of both. That is reflected in the overall cost of the loan. It also means that you may not be able to qualify for as much money as you need. These things should be kept in mind when submitting your application.
Can Spring Financial Help?
At Spring Financial we specialize in personal loans for those with all credit types and different income sources. We offer loans ranging from $500 to $35,000 that you can apply for in just a few minutes. The nice thing about our personal loans is that they are all open. No matter how long you have a loan for, you can pay down the principal whenever you want. We also report directly to both credit bureaus, meaning making your payments on time can help your credit score in a positive way. You can receive your funds as soon as 1 hour after approval with Interac E-transfer or they can be directly deposited into your bank account in as little as 2 business days. No matter what you need the money for, we can help. You can apply online, give us a call at 1-888-781-8439 or contact us through our live chat.
