5 Types of Loans for Unemployed People (Oct. 2023)

Loans For Unemployed People

Loans for unemployed people may seem like an impossibility, but they can be obtained if you know where to look. While applying for a loan – even a small one – isn’t usually a problem for someone with average to excellent credit, things become more complicated when you’re without a job for any length of time.

If you’re unemployed, getting rejected for a loan can feel like adding insult to injury. You need some funds to get you out of tough circumstances or maybe even meet basic needs, but lenders don’t want to take a chance on you. You can’t prove yourself and build a better life without help, but luckily there are opportunities for easy approval.

Whether you choose not to work, are forced to stop working due to circumstances, or have decided to retire early, there are still options available to you. Read on to learn more about the five types of loans that unemployed individuals may qualify for. We’ll explore personal loans, home equity lines of credit, co-signed loans, life insurance loans, and government loans, and we’ll offer up some tips on how to improve your chances when it comes time to apply.

Personal Loan | Home Equity Line of Credit | Co-Signed Loan
Life Insurance Loan | Government Grant

1. Personal Loan

Personal loans are most likely to be granted for a short time period (18 months or less) and at a higher interest rate. This unsecured loan is usually available to regular customers of banks or credit unions who wish to borrow a small amount of money ($5,000 or less), and who have good credit and payment history. You can also obtain a personal loan through peer-to-peer lending platforms where other consumers (not banks) carry the risk of the loan.

Here are three trustworthy companies with a good track record of working with customers for short and long-term personal loans.

  • Short-term loans up to $5,000
  • Online marketplace of lenders
  • Funds available in as few as 24 hours
  • Simple online form takes less than 5 minutes
  • Trusted by more than 2 million customers
  • See official site, terms, and details.


Overall Rating

Loan Amount Interest Rate Loan Term Loan Example
Up to $5,000 Varies Varies

See representative example

  • Personal loans from $500 to $35,000
  • All credit types are considered and welcome
  • Simple, no credit impact form
  • Helping consumers since 2001
  • 4.7 out of 5 Trustpilot rating with 2,000+ reviews!
  • See official site, terms, and details.


Overall Rating

Loan Amount Interest Rate Loan Term Loan Example
$500 to $35,000 5.99% - 35.99% 60 Days to 72 Months

See representative example

The upside of these lenders is that they are able to work with bad credit, so you can apply for funding to consolidate your debt, buy necessities, or otherwise get your finances in order even if you have less-than-perfect credit.

2. Home Equity Line of Credit

This type of loan, also referred to as HELOC, is for those who already own a significant amount of equity in their primary home. You’re borrowing against money already paid to your mortgage lender. If you’ve made significant progress on your mortgage, this can be a great way to get a sizable loan. Keep in mind, though, that your home becomes collateral in case of missed payments.

Chase Bank's Home Equity line of credit calculator

Handy online tools can help you know what home equity line of credit you qualify for before even applying.

Chase offers a really useful and user-friendly Home Equity Line of Credit calculator. You can enter in the appraised value of your home, mortgage balance, and loan-to-value ratio to find out how much you could qualify for.

However, there are fees involved in the application process. You can search for websites that will tell you what you can expect when applying for a home equity loan in simple terms for anyone new to this type of loan.

3. Co-Signed Loan

If you have a friend or relative who can vouch for your creditworthiness, this can be a great help. Another person can assume the risk on your loan by co-signing for you. This puts them in the position of being liable for non-payment if you default, but it’s usually one of the most effective ways to get a “yes” from a lender when you have limited or no income.

4. Life Insurance Loan

If you have a whole, universal, or variable universal life insurance policy, you can usually borrow against the value of your policy for as long as you need to. Just be aware that this type of loan is often pricey. In addition to taxes that can be triggered by the money withdrawn, your loan is subject to interest and possibly other fees.

5. Help from Uncle Sam

If you don’t qualify for, or aren’t comfortable with, the terms of loans available to you in your situation, it may be time to consider applying for loans or grants provided by the U.S. government.

It may take some time to research the wealth of opportunities available to you, but these benefits are usually designed to help people in just about every situation. Depending on your needs, you may find that a one-time assistance payment for a utility bill or groceries is sufficient to move you on to the next step in life. For long-term help with housing, education, child care, or even a business start-up, more involved subsidy programs can help you see your long-term goals come to fruition.

Screenshot of the USA.gov homepage

The U.S. government offers assistance to unemployed Americans through grants, loans, and other benefits.

Since the application process and qualifications for each grant or loan is unique, your first step should be to visit the United States Government Assistance website to search the category that best applies to you. The processing times for the program can be as little as a 14 days (for the most urgent needs) but may be as long as a year for more generous grants. The earlier you apply, the sooner you can get the help you need during unemployment.

Increase Approval Odds by Listing All Sources of Income

When you apply for a loan, it’s important to understand how lenders view your ability (or inability) to repay that loan. If you have absolutely no source of income available to you, it’s unlikely you’ll be seen as a good credit risk, and likely be turned away. Any source of revenue you have will increase your chances of acceptance. On your loan application, you can include many kinds of income from sources other than a traditional job:

  • Child support
  • Alimony
  • Settlement payments
  • Money from educational grants (such as Pell or SEOG)
  • Money received from a trust or estate payment plan
  • Self-employment or freelance income
  • Dividend or interest income
  • Pension, disability, Social Security, or military benefits
  • Unemployment payments (in certain circumstances)

Each lending institution will have its own requirements for which type of income they’ll consider. The kinds of income listed above are not usually considered long-term, stable income streams, so you may not qualify for long-term installment loans (such as those required for a mortgage or other large financing need). However, that doesn’t mean you won’t qualify for other loan products that can be valuable stepping stones to better finances.

Finance Your Way to a Better Future

When looking for a loan, it may seem like you’re surrounded by a world of “no”, but there are actually ways for you to get that coveted “yes.” Through personal loans, home equity lines of credit, co-signed loans, life insurance loans, or government grants, unemployed individuals have the ability to receive financing.

To prove yourself creditworthy for more long-term or substantial loans, you might have to start small, but with responsible spending you’ll get where you need to be. And making payments on time each month will go a long way toward establishing your creditworthiness. But right now, you’ve got five great loan options.

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