4 Loans for the Unemployed with Bad Credit in 2019

4 Loans for the Unemployed with Bad Credit in 2019
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Eric Bank
By: Eric Bank
Posted: June 25, 2019
Our popular “How-To” series is for those who seek to improve their subprime credit rating. Our articles follow strict editorial guidelines.

A strong economy is scant consolation if you find yourself struggling with unemployment. Millions of Americans are out of a job right now and are contending with having enough money to live on. Some turn to loans to get them over the rough patches, but what do you do if you are unemployed and have bad credit? Believe it or not, you do have options, and we’ll explore them in this article.

Before you apply for a loan, consider whether you’ve exhausted your other options. These include collecting unemployment insurance, welfare benefits, and help from family and friends. If you decide you need a loan, you’ll have a menu of choices, such as personal loans, cash advances, and lines of credit. We’ll show you the best online personal loans available right now if you’re unemployed and your credit is bad, plus we’ll discuss alternative types of loans.

Online Lenders | Alternatives | FAQs

Online Loans for Unemployed People with Bad Credit

Having bad credit shouldn’t cut you off from receiving a loan, even if you are out of work right now. However, you will have to show some form of income, such as welfare, disability, or unemployment benefits, backed by bank statements, investment account statements, or other documents showing sources of income.

Most online lenders also require you to be a U.S. resident at least 18 years’ old and have an active checking account.

MoneyMutual arranges short-term loans of up to $2,500 for folks with bad or scant credit. It matches your online loan application to its network of lenders who then compete for your business. You do not have to be employed to apply, but you must have a monthly income of at least $800. MoneyMutual® is not available in Connecticut and New York. The matching service is free.

   
★★★★★

4.7

Overall Rating

Loan Amount Interest Rate Loan Term Loan Example
$500 to $10,000 5.99% - 35.99% 3 to 72 Months

See representative example

CashUSA.com matches your online personal loan request for up to $10,000 to offers in its lender network. It accepts applications from folks with any type of credit who have steady monthly income of at least $1,000, after taxes. The lenders on the CashUSA.com network do not require credit scores, and scores will not affect the terms and fees of your loan. There is no charge for the matching service.

BadCreditLoans.com is a matching service for loan requests up to $5,000. However, the cap on loans to folks with bad credit is typically $1,000. Even if you are unemployed, lenders will work with you if you have regular income from disability or Social Security benefits. The minimum loan amount is $500 and repayment terms range from three to 36 months. Bad Credit Loans has been facilitating loans since 1998 and doesn’t charge for its matching service.

The lending partners of PersonalLoans.com offer online personal loans from $1,000 to $35,000 to folks with credit scores as low as 580. You don’t need a job to apply as long as you have an acceptable income source such as disability, Social Security, or unemployment benefits. The minimum monthly gross income is $2,000. The lenders on the PersonalLoans.com network may do a hard pull of your credit report that could slightly reduce your credit score. The matching service is free.

Personal Loan Alternatives for the Unemployed

A personal loan is attractive because it doesn’t require collateral. If the lender approves your loan, all you need to do to get your money is sign the loan agreement.

However, some folks won’t qualify for personal loans, whether due to bad credit, unemployment, or some other reason. Luckily, consumers have alternatives beyond personal loans that can help address a temporary cash crunch:

  • Credit Card Cash Advance: If you own a credit card, you likely have the ability to get a cash advance up to a set limit. Beware that interest accrues from day one, as well as cash advance fees that can mount up fast. Some cards specialize in offering low-fees for cash advances.
  • Peer-to-Peer Loan: These are similar to unsecured personal loans, except that the lender can be any individual or institution that accepts your application on an online marketplace. In 2017, CardRates.com named LendingClub the top P2P platform.
  • Loan from Family of Friend: If available, these might be the easiest to obtain, but keep in mind possible drawbacks. Even if you don’t have to pay interest, you risk alienating someone close to you if you fail to repay the loan. Also, some folks just don’t want to share their financial circumstances with their close ones.
  • Car Title Loan: You can use your car to secure a title loan as long as you have sufficient equity in the vehicle. These loans are costly and you risk losing your car if you default on the loan.
  • Home Equity Line of Credit (HELOC): This is a revolving loan account backed by the equity you have in your home. It usually charges a reasonable APR, but, of course, is only available to homeowners.
  • Refinancing Loan: If you have equity in your home or car, you may be able to arrange refinancing that allows you to cash out some of your equity.
  • Pawn Shop Loan: Pawn shops charge high fees and interest rates to advance you from 25% to 60% of the pawned object’s resale value. Best avoided if possible.

All of the alternatives listed above require serious consideration — evaluate each carefully if you do not qualify for a traditional personal loan to determine which may work for you.

How Can I Get a Personal Loan While Unemployed?

The four loan-matching services we review in this article all offer personal loans to unemployed individuals, even those with bad credit. The catch is you must show some form of regular monthly income. Typical sources include Social Security, disability benefits, pensions, annuities, and unemployment insurance.

The procedure for getting these loans is straightforward. First, you visit one of the loan facilitator websites and fill out a loan request form.

Our top-rated site is MoneyMutual, but all four follow the same basic procedure. If you meet the minimum requirements, the website will alert its network of lenders to your request.

Interested lenders will then contact you and invite you to fill out their loan application. These applications ask about your monthly income, including its source. If your income meets or exceeds the lender’s minimum requirement, you may qualify for a loan.

Because these websites serve consumers with poor credit, you should expect to pay a high interest rate to secure the loan. High fees may also apply, however, these are some of the few sources providing non-collateralized loans to people who are both out of work and have bad credit.

As long as your monthly income is steady and high enough, you stand a decent chance of getting a personal loan. If you need a large loan, consider PersonalLoans.com, which offers loans up to $35,000 to consumers having a credit score of 580 or higher.

Bad Credit Loans also advertises large personal loans up to $5,000. However, if you have poor credit, you should expect a loan of no more than $1,000. On the other hand, CashUSA.com offers to find loans up to $10,000 and doesn’t indicate any preset cap for those with bad credit.

How Can I Get a Loan without Proof of Income?

The loan matching services we review here all indicate you must provide some proof of income to get a loan. This could be a pay stub, a series of canceled benefit checks, or proof of regular annuity or pension income. If you can’t provide any proof of income, you’ll have to look to an alternative lending source.

Typically, secured loans do not require you to provide proof of income. That’s because you have to put up collateral to obtain a secured loan.

The lender knows it can seize the collateral and sell it if you default on your loan. That makes secured loans much less risky, which may entitle you to a lower APR and fees. The downside is you will lose your property if you default on your loan.

The usual forms of collateral that lenders routinely accept include your home, car, cash, and securities. For cars and homes, you can only borrow to the extent that you have equity in the property.

Equity is the value of the property that exceeds any existing loan balance on it. A HELOC is a popular way of unlocking equity in your home. A car title loan lets you cash out your equity in your vehicle, but typically has higher rates and fees than a HELOC.

If you have a savings or brokerage account, you may be able to pledge the account as collateral for a personal loan. You won’t be able to withdraw the collateral until you repay the loan. These too have favorable interest rates and lower fees.

Can I Get a Loan if I Just Started a New Job?

A job, new or not, is helpful for getting a loan. If you have a new job that ended a period of unemployment, you may have to document your salary. You can usually do this by sharing a copy of your employment acceptance letter with the lender. A few pay stubs should also suffice.

Proof of employment is especially important if you have a bad credit score. But you can look upon the loan as a golden opportunity to improve your score.

Credit Bureau LogosTo help boost your credit score, you must use a lender that shares your payment activity with at least one of the three major credit bureaus: Experian, TransUnion, and Equifax, and preferably with all three. All four lending networks reviewed in this article indicate they report your activity to at least one of the credit bureaus.

You want those reports to be positive, which means you always pay on time and always pay at least the minimum due. It could accrue to your benefit if you pay off your loan faster than required.

When you start a new job, the credit bureaus update your credit report to indicate the employer, the start date, and your salary. These facts alone may help increase your credit score. But the most important factor is to use the job to establish your creditworthiness by paying your bills on time.

Landlords are more willing to rent to gainfully employed individuals, and loans are more forthcoming. Whenever you take a new job, spend the time to review your three credit reports verifying the job shows up correctly, including salary.

No Job? Bad Credit? No Problem.

Well, perhaps we overstate just a bit. But the four loan matching services reviewed here —  MoneyMutual, CashUSA.com, Bad Credit Loans, and PersonalLoans.com — all facilitate loans to unemployed folks with bad credit. As long as you can show enough monthly income from a legitimate source, you stand a decent chance of obtaining a loan despite your bad credit rating.