The COVID-19 pandemic had affected millions of people from different parts of the world as it affected most of the business industry and employment rate. Whether you are part of the unemployed people or those who closed their businesses due to the difficulty of continuing business operations, it must be difficult to recover all your loss and the need to pay your daily expenses.
Recovering your losses and wondering what to do to compensate for your daily expenses is hard, especially if you’re unemployed and have no stable income from any avenue. If this is the case, you may wonder if you can get a payday loan while unemployed, and the answer is yes.
In this article, Nick Wilson, CEO of AdvanceSOS and an accomplished loan officer, shared his expertise on getting payday loans. AdvanceSOS is a loan aggregator. Its easy application helps borrowers reach a huge network of direct lenders to take a same-day deposit loan at AdvanceSOS.com even with bad credit.
Is It Easy to Get a Loan When Unemployed?
If you don't have any source of income, acquiring a personal loan can be difficult. You need to demonstrate that you can repay the loan through other methods. And before you try, consider whether a loan is the best option for your needs and make sure to look through your credit report to know your current credit score. Because if your credit report doesn’t look right, you may want to dispute the error before applying for a loan.
If you have a great credit score, it will help you get loans from different institutions and get approved in no time because the money you have to use to repay the loan does not necessarily have to come from your employer. Most personal loan lenders are aware that borrowers have different financial situations when getting a loan.
Benefits of a Personal Loan
A personal loan is a form of installment loan that pays you a lump sum payment of a set amount of money, usually between $1,000 and $5,000 or higher, each one is unique. You don't have to use collateral to get a personal loan because it's generally unsecured. It's possible to make a payment over six months to five years.
Personal loans can be used for a wide range of purposes, while some lenders may place restrictions on how they should be used. The loan interest rates are set in stone, so you won't see any changes while paying off your loan.
Here are the benefits of a personal loan:
Helps You Build Credit
When you take out a personal loan, you must make regular monthly payments toward the total you owe. Lenders always submit their payment history to the three major credit bureaus: Equifax, Experian, and TransUnion.
Payment history accounts for 35% of your FICO credit score, so making on-time payments will help you improve your credit score. Also, this implies that if you make late payments, you may lose your credit score, making it harder to get credit in the future.
Helps You Pay Your Bills
From consolidating debt to paying off medical bills, personal loans can be used for any purpose. A personal loan can be a suitable option if you want to fund a significant purchase but don't want to be restricted in how you spend the money. Before applying, check with your lender to see if the loan can be used for anything.
Consolidating Debt Easily
By paying off individual loans and credit card debt with a single personal loan, you may be able to streamline your finances. Because you won't have to make as many payments each month as you did before, you might get a cheaper total interest rate if your credit score has improved since you've taken out your previous loans.
Instead of disbursing cash to your account, some lenders specialize in debt consolidation and will pay off your other debts directly.
Am I Qualified for A Personal Loan While Unemployed?
Wilson believes that everyone is qualified to get a personal loan even if their status is unemployed because most lenders are willing to lend money. And these lenders believe that once they lend you money, you can repay it once you have the means. Keep in mind that a traditional paycheck isn't always the source of revenue.
A lender will consider the following as a source of income:
- Any interest, dividends, and capital gains earned from investments
- Child support
- Disability payments
- Investments like annuities
- Items sold online, or at a fair or venue
- Part-time income
- Regular payments from a settlement
- Rental property income
- Social Security
- Unemployment benefits
- Wages and salary from secondary or freelance jobs
However, if you don’t have any income from any mentioned, Wilson recommends you to ask the lender if you can utilize something of value as collateral. The term “secured loan” refers to a loan that is secured by collateral, and if you are unable to repay it, the lender can take it as security. Examples of collateral include:
- Cash on a savings account
- Cash in a certificate of deposit (CD) account
- Fine art
- Future paychecks
- Insurance policy
- Precious metals
- Retirement account
- Something else of value
Unsecured loans don't require you to put up any collateral. If you miss your payments on an unsecured loan, the lender will not be able to take your home, car, or other assets. Unsecured loans, on the other hand, are harder to obtain. You can always check if your lender offers secured loans when you're having trouble being approved for a loan.
Does Credit Score Matter in Getting a Loan?
No. However, to be eligible for a personal loan, you must have a credit score of 580 or above. Although the credit score needed for a personal loan varies by lender, it may be possible to qualify with a lower score.
You're not alone if you need a quick loan and don't have time to work on your credit score. Seek out low-interest loans. These lenders will be more likely to approve you for a loan if they have worked with clients with bad credit in the past.
About the Author
Amanda Girard leads the financial copywriting team at AdvanceSOS. Her invaluable input and expertise translate into articles posted throughout our website and other notorious channels. Since our founding in 2019, she has written the most comprehensive yet exciting pieces for our company.