Applying for an ‘Unemployed Loan’: Things to Consider

Are you currently facing unemployment and wondering if securing a loan is possible? You’re not alone in this quest. Most people who do not have a main job still successfully apply for loans, with the help of some of the tips that are in this article.

We understand that navigating the world of loans can be daunting, especially without a steady income. But don’t fret, as options are available, and we’re here to guide you through determining whether you could secure a loan for the unemployed.

Can unemployed people secure loans?

You might still qualify for a loan even if you don’t have a traditional job. Lenders understand that income can come from various sources and are willing to consider alternatives to conventional employment. So, if you’re receiving benefits or pensions, you could still be eligible. However, the options are limited and interest rates are higher because of the risk to the lender. In addition, you must have a good credit history to be approved.

Can I get a loan with zero income?

A loan for unemployed people still requires some form of income to ensure repayment, like social security benefits, pensions, or even child support payments. While job income isn’t mandatory, lenders may consider those alternative sources.

Unemployment does not necessarily close off the possibility of getting a loan. The key lies in showcasing sources of income that can support your loan repayments. 

Can my benefits qualify as income?

Yes, benefits can count as income when you’re applying for an unemployed loan. However, each lender has its own criteria. For example, some may accept benefits as a valid source of income, while others might have stricter policies.

If you have other sources of income, such as unemployment benefits, alimony, child support, pensions, investment income, or any regular payments from a trust or settlement, lenders may consider these as valid income for loan approval.

Have you been receiving certain benefits for a minimum of six months? You may qualify for budgeting loans or advances, aiding with essential expenses (rent, clothing, and household items). You can directly repay this loan from your benefits.

Can I obtain a Payday loan without income?

A Payday Loan is a loan specifically designed to cover your expenses until your next paycheck.They usually require proof of income. However, some lenders offer short-term loans or payday loans that require very little documentation for approval. However, be cautious as these can come with very high interest rates and fees. If you fail to repay them promptly, you’ll face additional charges and significant debt burdens that could exacerbate your financial situation if not managed responsibly.

Impact of сredit score on loan approval for the unemployed

When it comes to loan approval, having a good credit score can significantly increase your chances. However, even with less-than-perfect credit, options exist. Some lenders specialize in working with individuals with poor credit histories.

Is it more challenging to get an unemployed loan with a bad credit score?

Yes, it is significantly more challenging to find a loan for the unemployed with a bad credit score. Lenders typically see employment as a sign of financial stability and use credit scores to gauge a borrower’s creditworthiness and repayment history. Unemployment and a bad credit score can both increase the perceived risk for lenders, making them hesitant to offer loans. However, there are still options available, such as secured loans, loans from lenders specializing in bad credit loans, or seeking a cosigner, but these often come with higher interest rates and less favorable terms.

Approval odds for unemployed loans

Securing a loan while unemployed poses challenges, as fewer lenders are willing to extend credit under these circumstances. However, your likelihood of approval still depends significantly on your situation.

Some loan companies have approval rates as high as high percentages, but you can still be denied for reasons:

• Low Credit Score: Indicates a history of not managing credit obligations well.
• Incomplete Application: Missing information can lead to denial.
• No Credit History: Without a credit history, lenders can’t assess your risk as a borrower.
• Too Many Recent Credit Inquiries: Indicates you may be taking on too much debt.
• Mismatch with Lender’s Requirements: Not meeting the specific criteria set by the lender.
• Collateral Requirement: For secured loans, not having sufficient or acceptable collateral.

According to Sean Martin D. Plantado, Head of Customer Service at Digido.ph, understanding why your loan applications get rejected can increase your chances of approval for your next personal loan.

My loan got rejected. Will this impact my credit score?

Yes, applying for a loan can impact your credit score, but the rejection itself doesn’t directly lower your score. The rejection of your loan application doesn’t get recorded on your credit report or directly affect your credit score. Here’s how it works:

When you apply for a loan, the lender typically performs a hard inquiry on your credit report to assess your creditworthiness. Each hard inquiry can slightly decrease your credit score. This reduction is usually minor, but multiple inquiries in a short period can add up.

Maintaining good credit habits, like paying bills on time, keeping balances low on credit cards, and only applying for credit when necessary, can help mitigate the impact of a hard inquiry.

Guarantor’s Assistance in unemployed loan approval

While not always mandatory, some lenders offer specialized loans with a guarantor option.

This is especially beneficial for unemployed individuals or those with unfavorable credit histories.If your credit score is a concern, having a guarantor could bolster your application. A guarantor agrees to cover repayments if you cannot do so, providing added security for the lender.

If you have a guarantor, your approval rate increases.

However, your guarantor must comprehend their responsibilities. If you struggle with repayments, the guarantor is liable. And this could impact their credit rating.

Can I get an unemployed loan Online?

Yes, unemployed individuals can still obtain an online loan, but it may be more challenging compared to those with steady employment. Lenders generally look for assurance that you can repay the loan, traditionally through employment income. However, other forms of income or factors may still make you eligible for a loan.

Key features of online loans

Accessibility Redefined. Online loans have redefined accessibility, eliminating the need for physical visits to banks or financial institutions. With just an internet connection and necessary documentation, individuals can apply for loans from the comfort of their homes.

Adaptable Requirements. Traditional lenders often require a steady job as proof of income. However, online lenders like Digido recognize the diverse sources of income, including allowances, business income, or even benefits. This adaptability in requirements opens doors for the unemployed to access much-needed funds.

Speedy Solutions. In the realm of online lending, time is of the essence. The application process is streamlined, with most applications completed within minutes. Funds are disbursed swiftly, addressing urgent financial needs promptly.

Meanwhile, selecting the right online lender is crucial for a positive borrowing experience. Factors to consider include transparency, reasonable interest rates, and customer feedback. Platforms like Digido stand out for their commitment to transparency, ensuring borrowers are aware of all charges upfront.

What is the online loan amount limit?

The amount you can borrow from a lender depends on your personal situation. We suggest borrowing only money that you can afford to repay. Remember, missed repayments can both negatively affect your credit score and cause serious financial consequences.

Online lenders, like Digido, offer short-term loans with low to 0% interest for the first loan and an easy approval process. You can get the first loan up to 10,000 pesos, after that if the amount will be repaid in time for second loans the limit increases to 25,000 pesos. You can apply for a Digido loan for unemployed people if you don’t have a job but have alternative sources of income.

What are the reasons to Use Digido Loans?

Digido is a reputable, government-licensed online lender offering cutting-edge financial solutions tailored to customers’ needs. They streamline the lending process, ensuring swift decisions and fund transfers within minutes. And here’s why you should consider Digido for your financial needs:

• Seamless Online Operations. At Digido, experience an effortless online application process prioritizing speed and simplicity.
• Rapid Processing. Receive the money in your bank account within just 4 minutes.
• No Hassle. Digido eliminates the need for guarantors, extensive documentation, or security deposits.
• Minimal Requirements. Only one valid government ID is needed for loan processing.

What if repayment becomes a challenge?

Life is unpredictable, and financial setbacks can happen. If you find yourself unable to meet repayment obligations, don’t panic. Reach out to your lender at the earliest opportunity to discuss possible solutions. Ignoring the issue will only compound the problem.

Many lenders are willing to work with borrowers to adjust repayment plans, especially if you communicate early. You might be able to negotiate a temporary reduction in payment amounts, a pause in payments (forbearance), or an extension of your loan term to reduce monthly payments.

We also advise you to take a close look at your budget to identify areas where you can cut expenses. If you have multiple loans or high-interest credit cards, consolidating them into a single loan with a lower interest rate can reduce your monthly payments and make it easier to manage your debt.

Final thoughts

While unemployment might present hurdles, it doesn’t have to derail your financial plans entirely. By understanding your options, exploring alternative income sources, and borrowing responsibly, you can still manage your finances well during this tough time.