Applying for a loan without a job? Here's what you need to know
When you’re unemployed, it’s unlikely you’ll have a lot of cash coming in.
You may have income from benefits or from friends and family, but this may be better spent on your everyday living costs than paying off your borrowing.
So in essence, this isn’t so much of a question of can you get a loan, but more of should you get a loan.
A big commitment
Taking out a loan is a big financial commitment and you need to make sure you’re able to make the repayments each month.
If you don’t have any cash coming in from a job, you should look at just how much you have coming in from elsewhere. A good way to do this is to look at your bank statements for the past three months. After all your essential spending is taken out, do you have much left over? If you don’t have much, or you’re in your overdraft, you really shouldn’t be looking to take out a loan at this time.
When you apply for a loan, the lender will look at your income and outgoings and they’ll see whether you’re able to afford the repayments on it. So if you have very little left over, the majority of lenders will notice this and it’s unlikely you’ll be able to find a loan anyway, although it may not be impossible.
Remember, if you do take out a loan and find you’re not able to pay it back, this can have a serious effect on your everyday life. Not only will your credit history be damaged, but you may face costly charges and even legal action if you can’t pay the money back.
Consider using savings or selling assets
We understand that not all of us have money set aside in savings, but if you do, you should put this money towards whatever it is you’re planning to use the loan to purchase. After all, you won’t pay any interest on money you’ve saved yourself, so it’s far cheaper to use your money this way rather than borrowing. And even though using your savings means you’ll lose out on earning interest on them, the amount you lose will probably still be less than you would spend on interest on a loan.
But many of us may not have the cash in savings to do this. If this is the case, do you have any assets that you could consider selling to raise some money? Anything you don’t need in your everyday life could help you get the cash you need.
If you’ve inherited something from someone who has passed away, it may be worth selling part of this to help you. This may be difficult to do, but if you’re struggling for money and resort to credit that you can’t afford to repay, your situation may become much worse.
Widen your job search
To get more cash, rather than looking to credit, your priority should be to widen your search for a job if you’re still able to work. You may be looking in your immediate nearby area, but if you’re stretched for cash then it’s important to look further afield if you’ve had no luck so far.
You may have just been applying for jobs that you’ve done before, or that you like the sound of. If this is the case, and you haven’t heard anything back yet, you should try to look for jobs in a field you may never have seen yourself working in. The priority for you right now should be to get yourself an income, and then you can worry less about money and focus on finding a job you truly want.
On the other hand, if you’re unable to work right now – perhaps due to disability or illness – you could search the web for work you can do from home. Otherwise, you may be able to get help from the government, and you can find out more about this here.
Disclaimer: All information and links are correct at the time of publishing.