- A cosigner or co-borrower can help you qualify for a loan without a job.
- However, keep in mind that co-applicants will need income and good credit to qualify.
- Other financing options include credit cards, family loans, peer-to-peer loans and home equity loans.
- There are lenders that don’t verify income, but those can be dangerous and expensive.
The difficult thing about personal loans is that, often, when you need them most, you may find it difficult to qualify. That can be especially true if you’re currently unemployed. But there is a method you can use to qualify in that circumstance.
Here’s what you should know about qualifying for a personal loan without a job, what your options are, and what to avoid.
Inside this article
Can you get a personal loan without a job?
You can get a personal loan without a job—but you’ll need to have someone in your life who is willing to help you out. For those without a source of income, that means getting a co-signer.
“A co-signer can help those without income qualify for a personal loan—it could even improve the interest rate if the cosigner has good credit,” says Markia Brown, a certified financial education instructor at The Money Plug, a company that provides budgeting and credit coaching.
In one step up from a cosigner, you could jointly borrow a personal loan with a co-applicant who has dependable income and is creditworthy overall. Some but not all reputable lenders allow co-borrowers who share equal responsibility for repayment. Unlike a cosigner, a co-borrower has direct access to loan funds.
The key to getting that dual application approved is having a cosigner or co-applicant with excellent credit. After all, the lender is essentially using their financial information to qualify you. In fact, your lender will look for certain qualities in your cosigner or co-borrower, like a credit score of 670 or higher and debt-to-income (DTI) ratio that’s below 50%.
To calculate a DTI ratio, lenders look at monthly debt payments compared to earnings. So, if your cosigner or co-applicant pays $500 a month toward existing debt and earns $5,000 a month, their DTI ratio would be a sterling 10%.
All that said, it’s important to understand what a cosigner or co-borrower’s role is in the process. Not only would they be putting their name on your application, they’d also be on the hook for payments if you stop making them (in the case of a cosigner) or in general (co-borrower). And that loan would be added to their credit profile as if they took it out for only their use. So, asking someone to cosign a loan isn’t the same as asking for a quick favor—it’s asking them to make a financial commitment and trust that you’re going to hold up your end of the deal.
When Sound Dollar reviewed 15 top personal loan companies in mid-2022, eight of them offered the ability to borrow alongside a co-applicant. Below were the best overall lenders, according to our research.
Other ways to get a loan without a job
If you don’t have access to a cosigner or co-borrower and you don’t have a job, you may not be able to qualify for a personal loan. Still, there are alternatives.
Here’s how those options work:
Secured loan: A debt that’s secured by an asset, such as your car or cash. But be aware that, should you be unable to pay down a secured loan, you could lose that asset.
Line of credit: A loan that functions like a credit card, allowing you to take out money (up to a credit limit) at any time.
Credit card: Revolving debt that charges interest for balances that go beyond the billing cycle.
Peer-to-peer loan: A loan between individuals, or a business and individual. Banks are not involved.
Home equity loan: A loan taken out against your home’s equity.
Borrow from family: While a family member or friend might not cosign a personal loan, they may be able to support you with a smaller loan that won’t impact your credit or theirs.
There are also loans that don’t require income verification. However, those can be risky, carrying predatory interest rates and fees (more on that below).
Be wary of loans that don’t require proof of income
If you’ve been researching personal loans, you probably know that there are options out there that don’t require proof of income. And if you’re thinking, what’s the catch? You’re on the right track. Those loans can prove dangerous.
“Consumers should be wary of lenders that don't require proof of income because they tend to have higher interest rates,” says Brown. “Predatory lenders don't care where the money will come from as long as the consumer pays.”
There could also be steep fees and shorter repayment terms (sometimes weeks or months) for these types of loans. And, if you aren’t able to make those payments when the bills come due, it could be harmful to your finances long-term.
How to increase your income as you search for a loan
Your timeline will dictate how much you may be able to raise your income as you shop around for a loan. And, in general, the longer your timeline, the better your chances. Here are a few ideas to get you started:
Start a side hustle: This is a high-effort idea, but if you can leverage your existing skills, you may be able to start a successful venture.
Find part-time employment: If you’re reading this, you’re probably actively searching for a new form of employment. But it’s worth noting that part-time jobs can be helpful in at least partially protecting your finances during this time of transition.
Sell items for profit: One-off sales of your own stuff can help support you, but so can selling items as a business. (Consider starting an Etsy, eBay, or Facebook Marketplace online shop.)
Also, keep in mind: While getting a full-time job would certainly help your chances of qualifying for a personal loan, it’s not the only way to go. If you can prove consistent income—and positive cash flow—as a side hustler or part-time worker, that could be enough. It might make the application process more complicated, as you may not have simple pay stubs to share, but you could still get a loan without a job as we traditionally consider it.