Tips to avail loan when you are unemployed

Authored by Rohit Garg

Loans can sometimes be your only way out of a difficult phase like unemployment or when the economy is at a standstill. Ironically, getting a loan when you are unemployed can be somewhat challenging. However, a little research and foresight can help you avail of a loan even when unemployed.

When you lack job security, the easiest way to avail a loan is by offering the financial institution something as collateral against the loan amount. Your assets can help you get lower interest rates. Insurance policies do not offer much and your coverage might not be big enough for a decent loan amount.

If you are married, you can include your partner’s income as a source on your loan application. However, this depends entirely on the lender. Most banks allow you to use your spouse’s income as a source against the loan.

In the case of unemployment, you can always seek the help of a co-applicant for your loan application. If you can’t find another applicant, a guarantor also works as long as they fill in the necessary paperwork including KYC formalities and signature. A co-applicant with a good credit score and a steady source of income will increase your chances of getting a loan.

Income from investments in the form of dividends and rental properties is a significant indicator of your ability to repay a loan. Most lenders accept capital gains from investments as proof of a steady cash inflow.

If you don’t have any financial security like a job or any other source of income, most lenders will be reluctant to provide you loans of high amounts. If you can ask for a smaller loan amount, your chances of getting a loan increase manifold.

You can opt for a line of credit instead of a loan. It functions like a credit card with the option to pay back the amount in monthly installments over a period of time. You can add to your balance and pay it off in small amounts over the lifetime of the account.

One of the fastest and the most convenient way to get a small loan is through micro-lending platforms. The process is instantaneous and the best option in case of an emergency. Institutions like Fintech companies and P2P companies offer very linear borrowing processes through mobile apps and websites. The amount is credited directly to the account and you also get the option to repay the amount in installments.

Unemployment should not hinder your chances of moving further in life. If you are facing hard times and require a little financial impetus, you should consider getting a loan through any of the above mentioned options. Instant personal loans are accredited directly to your account and unlike most kinds of loans; they do not require any collateral.