Types of Loans for Unemployed People

Unemployment can be a challenging situation to navigate, mainly when unexpected expenses arise. Obtaining a loan without a job is tiring, especially if you have a bad credit score. But with the appropriate financial advice, you can pull yourself out of a rut. 

You should know how to borrow money without a job in case you need a personal loan for medical emergency or other similar circumstances. We’ve made a comprehensive guide to loans for the unemployed to help you find a way out of your financial crisis. 

Read on to find out more about this loan type!

What this article covers:

Can You Get Loans for Unemployment? 

Yes, you can get a loan while unemployed, although it can be more challenging than for individuals with a regular income. Some lenders may be hesitant to lend to those without a stable source of income, while others may be willing to offer loans to unemployed individuals with certain conditions.

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Types of Cash Loans for the Unemployed

When making a serious financial decision without a steady source of income, you should be aware of all your options.

1. Personal Loans

Personal loans are unsecured loans that can be used for a variety of purposes, such as consolidating debt, paying for a wedding, or making home repairs. They usually have fixed interest rates and monthly payments over a set period of time. 

Some lenders may be willing to offer personal loans for the unemployed with good credit history, although these loans may come with higher interest rates.

2. Same-Day Loans

Same-day loans are short-term loans that alternative lenders typically provide. As the name suggests, the funds are usually available on the same day as the application. 

They’re designed to provide quick access to cash, which can be useful for emergency situations. However, they often come with higher interest rates and fees.

3. No Interest Loans Scheme (NILS)

The NILS program provides interest-free loans to individuals who are receiving Centrelink benefits or have a low income. The loans can be used for a variety of purposes, such as purchasing household items or paying for medical expenses. 

Unlike other loan options, NILS loans don’t charge interest or fees, making them an attractive option for those who are struggling financially.

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4. Buy Now Pay Later Services

Buy now pay later services allow individuals to purchase items and pay for them in instalments over time. These services are typically offered by retailers and online stores. 

Some providers may offer interest-free periods, but if payments aren’t made on time, fees and charges can accumulate quickly. Unemployed individuals should be cautious when using these services to avoid accumulating debt they may not be able to repay.

5. Payday Loans

Urgent cash loans for the unemployed, such as payday or weekend loans, are short-term loans with high-interest rates and fees. They’re typically used by individuals who need quick access to cash but can be risky due to the high cost of borrowing. 

Payday loans are only recommended for unemployed individuals if they’re confident they can repay the loan in full and on time.

6. Peer-To-Peer Lending

Peer-to-peer lending involves borrowing money from individuals or investors through an online platform. This can be an option for individuals who need help to obtain loans from traditional lenders. 

Our company, Orange Loans, is a great way to ensure peer-to-peer lending since we make this process reliable and easy.

7. Credit Cards

Credit cards allow individuals to borrow money up to a certain limit, which can be useful for emergency expenses or to make purchases over time. However, credit cards often come with high-interest rates and fees. Also, unemployed individuals might face difficulty obtaining credit cards without a source of income.

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8. Car Loans

Car loans allow individuals to purchase a car and pay for it while the vehicle is kept as security for the loan. These loans are secured, which means the lender may repossess the car if the borrower fails to repay the loan.

9. Guarantor Loans

Loans for unemployed with bad credit include guarantor loans, which involve having a family member or friend act as a guarantor for the loan, meaning they’re responsible for repaying the loan if the borrower can’t. 

This is also a good option for instant loans for unemployed students as it can pay for their academic needs, such as a laptop loan or a vet student loan. 

10. Centrelink Advance Payment

Centrelink advance payments are short-term loans provided by the government to individuals who are receiving Centrelink benefits, such as the JobSeeker Payment, Youth Allowance, or Austudy. The loans must be repaid over time through Centrelink payments.

These payments can be useful for emergency expenses but should be used with caution to avoid accumulating debt.

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Reasons a Cash Loan Could Be Refused 

Here are some common reasons why lenders may refuse a cash loan for an unemployed person:

Lack of Income

Most lenders will require borrowers to demonstrate a regular source of income to repay the loan. For unemployed individuals, this can be a significant hurdle, as they may not have a steady source of income.

Bad Credit History

Lenders will typically review the borrower’s credit history to assess their ability to manage debt and make timely payments. If an unemployed individual has a history of missed payments, defaults, or bankruptcy, this may make it difficult to obtain a loan. However, you could still get bad credit unemployed loans.

Lack of Collateral

Some secured loans for the unemployed may require collateral to secure the loan. If an unemployed individual doesn’t have any assets to use as collateral, this may make it difficult to obtain a loan.

Unstable Employment History

Lenders may also review the borrower’s employment history to assess their stability and ability to repay the loan. If an unemployed individual has a history of frequent job changes or unemployment, this may be a red flag for lenders.

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How to Increase Chances of Getting a Loan Without a Job 

You can take steps towards building a good financial reputation to increase your chances of qualifying for a loan.

Look for Alternative Sources of Income

While you may not have a traditional job, you may have other sources of income, such as rental income, government benefits, or savings. These alternative sources of income may help demonstrate to lenders that you have a reliable source of funds to repay the loan.

Apply for a Loan With a Co-Signer or Guarantor

If you have a friend or family member who’s willing to cosign a loan or act as a guarantor, this can help strengthen your application. Remember that the co-signer or guarantor will be responsible for repaying the loan if you can’t do so.

Consider a Secured Loan

Secured loans require you to put up collateral, such as a car or any property, as security for the loan. Since the lender has some security in the form of collateral, they may be more willing to extend a loan to someone without a traditional income source.

Apply for a Smaller Loan Amount

If you’re having trouble getting approved for a larger loan, consider applying for a smaller loan amount. A smaller loan may be more manageable and easier to repay, making lenders more willing to approve the loan.

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Improve Your Credit Score

Getting approved for a loan can be difficult with poor credit history. You can improve your credit score by paying off debts, making timely payments, and correcting any errors on your credit report.

Research Lenders Who Specialise in Unemployment Loans in Australia

Some lenders specialise in providing loans to unemployed individuals or have alternative sources of income. Researching these lenders will help you see if they may be a good fit for your needs.

Conclusion 

Many lenders are willing to help out unemployed people despite what you think. Though the process can be difficult and might take a few tries, you’ll get there eventually.

With Orange Loans, you can speed up this process since all you need is an online application, and the right lender will swoop by!

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