If you find yourself unable to make ends meet while unemployed, a personal loan may be a useful tool. However, you’ll need to prove you can pay the loan back, which is why it can be difficult to qualify. While there are obvious benefits to getting the funds you need, there are also drawbacks to consider before applying.
Can I get approved for a personal loan if I’m unemployed?
It can be complicated to get approved for a personal loan if you’re unemployed. But in some cases, it can work.
“While the employment status is a significant factor in assessing a loan application, it is not the sole criteria. Lenders primarily focus on the applicant's ability to repay the loan,” explained Jeff Rose, a certified financial planner and founder of Good Financial Cents. “In some cases, unemployed individuals can still secure a personal loan if they have alternative sources of income such as rental income, investments, or government benefits.”
Other potential ways to increase your odds of approval include adding a qualified cosigner, and going with a secured loan. The latter requires you to put up collateral, which helps reduce the overall risk associated with lending to someone who isn’t currently employed.
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Risks when taking out a personal loan while unemployed
Here are some risks to consider when taking out a personal loan if you’re unemployed:
- Missed payments: You may not be able to make every payment if you remain unemployed for the duration of your loan term, leading to negative marks on your credit, which can make it harder to get a loan later on.
- Loss of assets: If you take out a secured loan, defaulting on it could mean losing your collateral.
- Fees: Missing payments can also mean paying a late fee. But riskier applicants, like those who are unemployed, may see higher origination fees, too.
- Higher overall costs: Strong loan applicants tend to be approved for low annual percentage rates (APRs). The APR accounts for the interest rate and any upfront fees, and reflects the total cost of borrowing. Being unemployed may lead to higher APRs, according to Rose. And if you go with a lender that offers payday loans, those costs can be equivalent to APRs in the triple digits.
- Cosigner responsibilities: If you were to stop making payments on a cosigned personal loan, the responsibility would then fall to your cosigner. And any late payments you make could damage their credit as well. Keep this in mind when asking someone to cosign a loan for you.
- Be careful: If you still can’t qualify for a personal loan, it may be tempting to get a payday loan. Payday loans should be avoided if possible — these short-term loans typically must be repaid in two weeks, and may have astronomically high APRs, depending on your state.
Check Out: Unemployed With Credit Card Debt? 6 Ways To Handle It
Factors lenders consider for approval
Personal loan lenders consider these factors when determining whether to approve you for a loan:
Credit score
Your credit score is one way that lenders can evaluate if you’re likely to repay the loan, based on your credit profile. This includes things like the length of your credit history, your payment history, and how much you owe. For reference, lenders typically give the best rates to borrowers with a FICO score of 670 or higher. The higher your score, the better.
Debt-to-income ratio
Your debt-to-income ratio (DTI) is calculated by dividing your minimum monthly debt payments by your gross monthly income. For example, if you pay $500 a month toward your various existing debts, and earn $5,000 per month before taxes, your DTI would be 10%. Lenders typically want you to have a DTI ratio that’s below 35%, but lower is better.
Payment history
Lenders want to see that you’re the type of person who is likely to repay the loan. So your payment history is another key factor. The fewer times that you’ve missed payments or paid late, the better your chances of qualifying for a loan.
Income
Income is certainly a factor that lenders consider when evaluating applicants, and some lenders will have stated minimum income requirements — but that doesn’t necessarily mean you need a traditional job. The key here is that money is coming in, so other sources of income can also count. (More on this below.)
Advertiser DisclosureOverview
Lightstream is one of three Credible partner lenders to offer loan amounts up to $100,000, which makes it ideal for financing large expenses like home improvements or weddings. Funds are available as soon as the same day you apply, and you'll have up to 12 years to repay certain types of loans, including home improvement loans, RV loans, and boat loans. There are no origination fees, and rates are low — Lightstream's lowest APR beats SoFi's advertised lowest APR by 1 percentage point. But you'll need good credit to qualify.
Unlike most lenders, Lightstream does not let you prequalify on its site. Nor does it provide a contact phone number next to its customer service hours on its website.
Repayment terms
2 - 12 years, depending on loan purpose
Eligibility
Available in all states except RI and VT
Time to get funds
As soon as the next business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Eligibility
Available in all 50 states
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Eligibility
Available in all 50 states
Loan uses
Debt consolidation, paying off credit cards
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number. Once you have a loan with SoFi, you may be eligible for unemployment protection and unemployment assistance.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Fees
Option to pay an origination fee (up to 6%) in exchange for a lower rate
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 8.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Overview
Avant personal loans are a good choice for borrowers with bad credit looking for small- to moderate-sized personal loans. Loans are available up to $35,000 and you could get the money as soon as the next business day after approval. Plus, Avant is more likely than some lenders to approve the applications of borrowers who've prequalified with Avant. However, the lender charges an origination fee up to 9.99%, and its top-range interest rates are among the highest of the lenders we reviewed.
Fees
Origination fee, late fee, dishonored payment fee
Eligibility
Available in all states except HI, IA, MA, ME, NY, VT, and WV
Time to get funds
As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
Loan uses
Debt consolidation, emergency expense, life event, home improvement, and other purposes
Repayment terms
1 to 5 years (2 to 5 years through Credible)
Overview
It’s worth considering a personal loan through Splash if you have good credit (ideally, a FICO score above 700). The platform offers loans from a wide range of lenders, and next-day funding is available. Plus, Splash has a live chat feature so you can get real-time answers without having to wait on hold or for an email. Loans are available up to $100,000 if you apply via Splash’s website.
Rates are competitive, but borrowers with excellent credit may find lower APRs elsewhere. If you need a repayment term longer than five years, you’ll need to look elsewhere as well.
Loan amount
$5,000 - $100,000 (up to $35,000 on Credible)
Eligibility
Available in all states except VT. OH and NM net disbursed amount must be greater than $5,000. MA must be greater than $6,000
Time to get funds
Same day available, typically 1-3 days
Loan uses
Debt consolidation, home improvement, medical expenses, major purchases
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Overview
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Eligibility
Available in all states except MA, MS, NV, and OH
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
Overview
BHG Money stands out for offering the largest loan amounts — up to $200,000 — of any Credible partner lenders. Simply put, if you need an unsecured personal loan over $100,000, there are very few places to look, but BHG is one. You'll have up to 10 years to repay the loan, but you'll need an annual income of at least $100,000 to qualify and a FICO score that's 660 or higher. However, if you have a cosigner that meets these requirements, BHG will consider your application.
Loan amounts start at $20,000, so look elsewhere for small loans. And BHG charges a modest origination fee between 2% and 4%, depending on your financial profile. Loan funds are available within three to 14 days of loan approval. Note that you can't prequalify with BHG.
Fees
Origination fees, late fees
Eligibility
Available in all states except Maryland and Illinois
Loan uses
Debt consolidation, baby (adoption), engagement ring financing, moving (relocation), business, home improvement, special occasion, cosmetic procedures, major purchase, taxes, credit card refinancing, medical expenses, vacation, wedding, other
Fees
Origination Fee, $15 Late Fee, $25 NSF Fee
Eligibility
Available in all states except CO, CT, ME, NV, NH, TN, VT, WV, WY, and all U.S. Territories
Time to get funds
Funds typically deposited into your account in 1 business day13
Loan uses
Debt consolidation, credit card refinancing
Overview
OneMain Financial has multiple options for bad-credit personal loans. There is no minimum credit score required (if you apply directly with OneMain), which means you could get a loan with bad credit (FICO below 580). Plus, cosigners are allowed — a cosigner is someone (ideally, with good credit) who promises to repay the loan if you can't, which can make it easier to qualify or lower your rate. And, secured personal loans are available. You secure a loan with collateral, which may also help you qualify or lower your rate.
Rates are higher than competitors and OneMain charges origination fees as either a flat fee up to $500, or a percentage from 1% to 10% (depending on your state of residence). Note that even if you prequalify for a personal loan with OneMain, getting approved isn't a given.
Fees
Origination fee, unsuccessful payment fee, late fee
Eligibility
Must have photo I.D. issued by U.S. federal, state or local government
Time to get funds
As soon as 1 to 2 days after acceptance
Loan use
All except business, and education
Other ways to qualify for a personal loan while unemployed
Lenders will consider many factors when reviewing loan applications, which can work in your favor if you’re currently unemployed. Here are a few factors that may help you qualify:
Social Security
If you receive Social Security benefits, that can help show that you’re able to afford the monthly payments associated with a personal loan. However, keep in mind that if you’re receiving Supplemental Security Income (SSI), your personal loan would be counted toward your resource limit if you don’t spend the money within the month you receive the loan.
Unemployment benefits
If you were let go from your job through no fault of your own, then you may be eligible to receive unemployment benefits, which can help showcase your ability to repay the loan. However, your lender may need proof of your unemployment, how long you’ve been unemployed, and how much you get paid in unemployment benefits, among other considerations. Your state unemployment office should be able to get you what you need.
Alimony or child support
If you receive alimony or child support payments, those can also be used on your personal loan application. You will likely have to provide proof of payments — and potentially proof that this income will continue for a certain period of time.
Spouse’s income
If your spouse earns money, you may be able to use their earnings on your loan application. However, keep in mind that they may have to become a co-borrower if you plan on going this route. Not all lenders accept co-borrowers.
Pension or retirement income
Like Social Security benefits, any sort of income you earn as a retired individual, such as a pension, may be used on your application. To access retirement account funds without paying penalties, you generally have to be at least 59 ½ years old.
Keep in mind
If you have retirement accounts, talk to a financial advisor first to determine if it’s a good idea to withdraw funds.
Recurring interest
If you receive interest payments or dividends from investments like stocks or bonds, you can also use those to show income on your application. If that income isn’t from an asset that decreases over time, you may not even have to prove that the income will continue.
However, it may make more sense to sell some of those assets instead of taking on debt, especially given the risks associated with borrowing while unemployed. It’s always a good idea to talk to a financial professional before making that decision.
Rental income
Income from a rental property can also be included in your personal loan application by providing a Schedule E tax document showing those profits. Depending on your situation and funding needs, though, selling that property may be a better option.
Talking to a financial professional can help you understand your options, and how those might impact your finances and tax obligations.
Royalties
If you’ve created a product that earns royalties, such as music, books, or movies, you can include those as part of your income on your personal loan application. However, you’ll likely need to show proof of these payments, which may be expressed as net profit plus any depreciation, if applicable.
Foster care and adoption subsidies
Foster parents and those who have adopted a child may receive subsidies that are meant to help with the costs of raising a child, and can include monthly payments. These subsidies can also be used on your personal loan application.
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FAQ
What if I have bad credit while unemployed?
While you can still get a personal loan with bad credit, it will be very difficult to qualify if you also have no income.
Where can I get a personal loan while unemployed?
Many lenders accept unemployed applicants, especially if you can show that you have at least one source of income, such as child support or Social Security.
However, it’s important to be skeptical of any lender that calls out “easy qualification,” such as payday lenders. These may come with highly inflated costs when compared to traditional lenders, which can lead to a cycle of debt. A personal finance marketplace, like Credible, can help you find and compare reputable lenders.
Should I get a personal loan while unemployed?
It depends. There are risks associated with taking on more debt while unemployed, such as missing payments, and having to pay more to borrow. And depending on your situation, there may be alternative options, such as government programs, which may be able to help without putting you into debt.
So, if possible, it’s best to avoid taking on debt while you’re unemployed.
However, if you’re in a tight spot financially and can’t access those funding alternatives, a personal loan may be a useful tool. The key is understanding the total costs as well as how that fits into your current financial situation. A personal loan calculator can help here, but it’s also a good idea to talk to a qualified credit counselor if you aren’t sure.
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Meet the expert:
Devon Delfino
Devon Delfino is an independent writer specializing in personal finance. Her work has been featured in publications such as the L.A. Times, U.S. News and World Report, Mashable, The Startup, Business Insider, Forbes, MarketWatch, CNBC, and USA Today, among others.
