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Explore 5 of the best and most secure options to get loans for unemployed person that can help you rise from your financial burdens!
Loans are important financial aids that help individuals achieve their goals, grow their wealth or get out of difficult emergency situations.
While they are a suitable option when you’re in a pinch, traditional lenders typically prioritize stable employment and regular income as prerequisites for loan approval and that might not always be your case.
Maybe you’re in-between jobs, a student, a homemaker or looking to start your own enterprise.
Whatever the situation may be, most financial institutions would consider you an unsuitable candidate for loans. But don’t worry, as there are still safe options for you to explore and you can still save money when you are unemployed.
In this article, we will discuss —- ways how you can secure loans for unemployed individuals easily. But before that, let’s start with some factors that affect your ability to get a loan for an unemployed person.
Factors Affecting the Ability To Get Loan for Unemployed
Here are some factors that can help determine how easily you can secure a loan as an unemployed person:
1. Collateral
Collateral refers to assets that can be pledged to secure a loan, such as property, vehicles, or valuable possessions.
Having substantial collateral can provide lenders with a sense of security, as it serves as a backup repayment option in case of default, making it more likely for them to approve the loan application.
2. Alternate Income Streams
While traditional employment may be absent, having alternate income streams can positively influence your loan eligibility.
Income generated from rental properties, dividends from investments, or royalties from intellectual property can demonstrate a consistent flow of funds.
Lenders may consider these alternate income sources as a means of repayment, increasing your chances of securing a loan.
3. Existing Relationship with Lender
Having an established relationship with a lender can work in your favour when applying for a loan for the unemployed.
Lenders may be more inclined to consider your loan application based on their existing knowledge of how you can manage your finances while being unemployed and if you follow responsible banking practices.
4. Credit Score
A good credit score reflects responsible credit management, timely payments, and low credit utilisation.
Lenders consider credit scores as an indicator of your creditworthiness and the likelihood of repaying the loan.
5. Short Loan Period
Opting for a shorter loan period can increase your chances of loan approval as an unemployed person. Shorter loan periods mean a shorter repayment duration, reducing the overall risk for lenders.
While these factors can influence your loan eligibility, you don’t need to worry if you can’t check all the boxes. Here are some ways you can get a loan today, without a job in place!
5 Ways to Get a Loan While Being Unemployed
1. Loan Against Collateral
The first and foremost way to get a loan for unemployed person is with collateral.
Banks and financial institutions may provide loans against collateral such as property, gold, fixed deposits, or other valuable assets. The collateral serves as security for the lender, increasing your chances of loan approval.
2. Personal Loans
Personal loans for unemployed are a popular choice for individuals in need of funds and can be a great option for an urgent loan for unemployed in India.
These unsecured loans typically do not require collateral but rely on factors such as credit history, income potential, and repayment capacity.
While interest rates tend to run high, there are several new options and online loan apps that ensure the entire process is smooth.
3. Consider a Co-Signer or Guarantor
Having a co-signer or guarantor can significantly increase your chances of loan approval if you are unemployed.
A co-signer is someone who agrees to be equally responsible for loan repayment if you default.
They should have a stable income, good credit history, and a willingness to take on the responsibility. This provides lenders with an additional layer of security and reassurance, making them more likely to approve the loan.
4. Microloans or Peer-to-Peer Lending
Microloans are small loans offered by microfinance institutions, while peer-to-peer lending connects borrowers directly with individual lenders.
These alternative lending options often have more flexible requirements and may consider factors beyond regular income, such as business plans, skills, or social impact.
These options have gained popularity in India, especially for individuals who are unemployed or have limited access to traditional loans.
5. Government Schemes and Support
The Indian government has launched various schemes and initiatives to support unemployed individuals. For instance, the "Pradhan Mantri Mudra Yojana" provides loans for small businesses and self-employment, while the "Stand-Up India" scheme focuses on facilitating loans for women and entrepreneurs from marginalized communities.
Additionally, state governments and financial institutions offer specific loan programs or subsidies aimed at supporting unemployed individuals. Research and explore these government schemes to find potential loan options and financial support tailored to your needs.
Takeaways
While being unemployed can present challenges in securing a loan, it is not impossible.
By considering loans for unemployed such as collateral-based loans, personal loans, exploring co-signers or guarantors, micro-loans or peer-to-peer lending, and leveraging government schemes, you can increase your chances of obtaining the financial assistance you need.
Remember to assess your repayment capacity, review the terms and conditions of each loan option, and diligently fulfil your obligations once approved. Additionally, seeking guidance from financial advisors and experts can provide valuable insights and help you make informed decisions.
With careful planning and perseverance, you can navigate the loan landscape and access the funds necessary to support your goals, even during periods of unemployment.
