Can you get a loan without a Job? 6 financing options

Getting approved for a loan typically requires showing income to prove you can make the payments. However, there are many reasons why you may not have a regular paycheck, including retirement, working irregular jobs, or being unemployed. Can you get a loan without a job? Learn about lender requirements, different types of loans, and alternative financing options to consider.

Can you get a loan with no job?

One of the most important considerations when reviewing a loan application is the borrower’s ability to repay the loan. Conventional lenders typically compare a borrower’s paycheck against their monthly obligations to determine if they can make the payments. Other considerations include the borrower’s credit score, the loan type, assets, and history with the lender.

These factors don’t just impact the loan approval decision. They also factor into the decision of how much you can borrow, the length of the loan, interest rates, fees, and the types of loans you’re eligible for. Those factors combined determine your monthly payment.

Alternative sources of income

For many people, providing a paycheck stub is not an option because they don’t have a regular job. However, they may still have income or assets that enable them to make monthly payments on the loan.

Here are a few examples of the types of income or assets you can use to qualify:

• Social Security income. Eligible retirees receive monthly payments from the government based on their employment history and service. Spouses and children of deceased workers may also receive monthly payments as well.
• Other retirement income. Distributions from retirement accounts, like 401(k), IRA, 457, or 403(b) plans, provide regular income that can qualify for a loan.
• Disability benefits. Workers on short- or long-term disability may be able to use those payments as income to get approved for loans. For short-term disability, lenders may want to understand how you’ll continue making payments when benefits are exhausted.
• Self-employment income. Owning a business can be lucrative, but proving your income can be challenging. This is especially true for newer businesses or those with volatile or seasonal income.
• Irregular employment. Although you may have a job, it may not provide a steady income, you may work for multiple employers, or you may not be able to document your wages.
• Monthly stipends. Research students and others often get monthly stipends to cover some of their expenses. While these payments may not be considered a job, they can be used to qualify for a loan.
• Trust assets or family wealth. Wealthy families often create trusts for estate planning purposes. The trusts may provide a monthly income for beneficiaries, such as children or grandchildren, to help them cover expenses and qualify for loans.

Loans for individuals without jobs

When you need extra cash, there are many ways to get the money you need. Here's how to get a loan with no job:

Personal loans

Personal loans are unsecured term loans that use your credit score and income to qualify. These loans typically have a fixed interest rate, which gives you a stable monthly payment that you can budget around. How much you can borrow and the length of repayment vary by lender. However, typical loan terms range from 12 to 84 months, with loan amounts up to $100,000.

When you don't have a paycheck, qualifying for a personal loan can be challenging with traditional lenders. They typically want borrowers to have a steady job so they can be assured the money will be paid back. Online lenders offer personal loans as well, but their requirements tend to be less stringent.

In some cases, you can qualify for a personal loan based on your credit score alone, without having to provide proof of income. For borrowers with bad credit, some lenders look at alternative factors, like education, when evaluating applications.

While you can get approved for a personal loan without a job, some lenders may charge higher interest rates and fees due to higher risks. Alternatively, they may require a shorter repayment period and have lower loan limits if you are unable to verify your income.

Peer-to-peer lending loans

Peer-to-peer lending allows everyday consumers to lend and borrow money through a centralized hub. Lenders can filter borrowing requests according to a variety of criteria, like credit score, loan amount, borrowing history, and income. To borrow money through a peer-to-peer lending platform, you don't need to have a steady job or a consistent paycheck. However, you may be limited to how much you can borrow or receive a higher interest rate on your loan.

As part of your peer-to-peer lending request, you may be required to submit a personal statement telling prospective lenders about yourself and what you plan on doing with the money. Even if this isn't a requirement, it is a good idea to share your story if the platform allows it. This is your chance to share why you don't have a job, how you plan on repaying the money, and other important details about your situation.

Some peer-to-peer lending platforms will not fund your loan request unless it is 100% funded by lenders within the offer period. In this scenario, you could be 90% subscribed and still not receive any money. So, there is no guarantee that you will get the money, even if numerous lenders believe in you.

Secured loans

Even when you don't have a job, you can borrow money from some lenders through secured loans. A secured loan is a loan backed by an asset. In some cases, the lender places a lien on the asset, allowing you to continue using it while the loan is outstanding. A mortgage and a car loan are two examples of secured loans where you don't have to give up control of the collateral.

Other lenders, such as pawn shops, require you to surrender the asset until the loan is paid off. Pawn shops may lend against a variety of assets, including jewelry, guns, collectibles, and musical instruments. These loans are typically a fraction of the asset's worth because the pawn shop may not be able to immediately convert the asset into cash if you are unable to repay your loan.

Most people borrow money to buy a car. When this loan is paid off, you receive the title to the vehicle. Through a title loan, you can borrow money against the vehicle title after it has been paid off. Generally, you can continue driving your car when taking out a title loan. However, the lender may install GPS tracking and a "kill switch" that prevents you from starting the vehicle if you're behind on payments.

Title loans and pawn shop loans are expensive ways to borrow money. Although these loans are secured by an asset, they still charge high interest rates. Experian reports that title loans often charge 25% per month, which equates to 300% per year. With added fees, the APR can be even higher. If you are unable to stay current with payments, the lender can sell your asset without your permission for a fraction of its worth.

Alternatives

In addition to the common ways to get a loan with no job mentioned above, these alternative financing options are a good way to get the cash you need.

Cash advance

Rather than applying for a new loan, consider getting cash from your existing credit cards. Most credit cards allow cardholders to access a portion of their credit limit for cash withdrawals through the ATM, online, cash advance checks, or in person at a branch.

The cash advance limit is typically a fixed amount or a percentage of your credit limit, which is significantly lower than your overall credit limit. While this can be a quick way to get a loan without a job, the costs can be expensive. If you're unsure of your cash advance limit, you can view your account online, review a recent statement, or contact your bank or credit union for clarification.

Unlike a credit card purchase, there is no grace period with a credit card cash advance. Instead, the card issuer starts charging interest on the transaction amount immediately. Interest rates on cash advances also tend to be higher than the standard purchase APR or balance transfer APR, so you'll be paying more to borrow. Additionally, card issuers typically charge a one-time cash advance fee of 5% of the amount borrowed. This amount is added to your balance once the transaction has been approved.

401(k) hardship withdrawal

Although you may not have a job right now, you may have money sitting in a 401(k) plan at your previous employer. Workplace retirement accounts, like a 401(k), generally charge penalties for early withdrawals. When you make a qualified hardship withdrawal, you may be able to avoid the 10% penalty. However, you may still owe taxes on the amount you withdraw.

There isn't a specific definition of what qualifies as a hardship withdrawal, but the IRS defines it as "an immediate and heavy financial need, and limited to the amount necessary to satisfy that financial need." A few examples of withdrawals that avoid the 10% penalty are the birth or adoption of a child, a permanent disability, a terminal illness, and paying health insurance premiums while unemployed.

A hardship withdrawal is different than a 401(k) loan. The amount you withdraw is not repaid to the plan, which means that the money will no longer grow tax-deferred until retirement. Depending on your age, this can have a profound effect on your retirement nest egg.

Home equity investment

If you own your home, you may be able to pull cash out of your equity. While a home equity loan or HELOC typically requires good credit and a regular paycheck, a home equity investment (HEI) does not. You don't need to provide proof of income, so you can get a loan with no job. Additionally, you can qualify for up to $600,000 with less-than-perfect credit.

With an HEI, you'll receive a lump of cash upon approval. You don't need to make any payments. Instead, you'll share a portion of your home's appreciation when you sell or refinance the home anytime during a flexible 30-year term.

Using an HEI to access your home equity leaves your current mortgage untouched. It won't impact your current interest rate, loan term, or monthly payment. This is ideal for homeowners who were able to lock in a low rate over the past few years.

Government grants and financial assistance

When you don't have a regular job, there are many government programs and community organizations that offer financial assistance. Depending on the program, you may receive a lump sum of money or recurring payments to help cover your expenses. Some of the money may be in the form of a grant, which doesn't need to be repaid. Others are loans with low interest rates or extended repayment periods, which helps keep the monthly payments low.

Here are a few examples of the financial assistance programs that may be available to you:

• Unemployment Insurance. If you recently left your job and are looking for a new one, you may qualify for unemployment benefits. Contact your state's Department of Labor online, over the phone, or in person to learn your options and submit a claim.
• Temporary or Public Assistance. These government programs offer financial aid to needy adults who are unable to work, can't find a job, or whose job doesn't pay enough.
• Non-profit organizations. Charities like the United Way and Salvation Army offer financial assistance to help cover household expenses like rent, groceries, and other basic needs.
• Dial 2-1-1. Dial 211 on your phone to connect with local social services and receive referrals for emergency housing.

Frequently asked questions

How do you get a loan with no job?

Many online lenders and alternative financing companies do not require proof of income to approve a loan application. Getting approved is typically easier with good credit and assets to support your loan request.

What kind of loan does not require proof of income?

While traditional lenders typically want a recent paycheck stub, you can get approved for a personal loan online without verifying your income. Other borrowing options include a credit card cash advance, 401(k) loan, or hardship withdrawal, or an auto title loan. If you own your home, you may qualify for a home equity investment to withdraw cash from your home's equity.

Can you get a hard money loan with no job?

Hard money loans are a good way to get a loan with no job because the lender primarily uses the value of the collateral to approve the loan instead of your paycheck. These lenders often consider alternative forms of repayment, such as alimony, unemployment benefits, and rental property income.

Final thoughts

Many people think that you cannot get a loan without a job. But that's not true. There are numerous ways to borrow money if you don't have a traditional paycheck. Some lenders use your assets as collateral, while others lend based on your credit score and alternative sources of income. Additionally, numerous government programs and community organizations offer financial assistance to those in need.