Can I Get a Loan While I’m Unemployed?

Most lenders and loan providers will reject your application if you don’t have any income, but you can still get loans when unemployed. Look for lenders that will accept benefits as income or proof that you’ll have money soon.

When you apply for a loan, the top priorities for any lender will be making sure that you can afford it. They’ll check your credit store, run affordability assessments and make sure you can pay back what you owe.

A responsible lender will want to see proof that you can afford your loan repayments, without stretching your income too far. But what if you’re unemployed and don’t have any income at all?

Lenders require proof of affordability for a loan. If you're unemployed you're likely to be rejected as you can't show you can make every repayment. Selected loans might be available depending on your circumstances.

Loans for the unemployed are very hard to come by. You’ll need to look for lenders that will accept another form of income. If you don’t have a job, you’ll have to find a lender that’s happy to consider your benefits income.

If you’re a student, find a lender that will let you clear your debt when your student loan payment comes in.

Read on for more information about how to get loans when unemployed.

Looking for other information on Loans? This guide has info on 'What loans are available when unemployed (personal / Student)?. We have also writen extensively about:

• - What loans can i get while on universal credit?
• - What loans accept bad credit history?
• - What loans are available where everyone is approved?
• - What loans are available where you don't need a guarantor?

We update all our guides regularly. If you are researching loans and we haven't got an exact guide that helps you, keep coming back as we update daily.

Loan Affordability Assessments

When you apply for a loan, there are several different checks that lenders do. Lenders will check your credit file and credit score, seeing how you manage your money. If you’ve always kept up with your bills and debts, your credit score should be quite high. If you’ve got a tendency to miss bills and minimum payments, there’s a good chance your credit score is lower.

Your credit file contains information about how much debt you already have, and what proportion of your income is already taken up by debt.

Lenders run an affordability assessment, considering your regular income. If you don’t have a job, they can’t easily see that you have a chance of paying what you owe.

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Borrowing Money as an Unemployed Student

As a student, you do have a regular income. Sadly, it’s not regular enough for most lenders. You’ll get money at the start of every term and you’ll need to budget carefully to make sure that it lasts until your next student loan payment. If your money runs out a little earlier than planned, or if you’re dealing with a big unexpected expense, you’ll need to find a lender that considers your current situation.

As a student, you might not be able to make monthly payments but could pay your debt in full with your next student loan payment. Look for flexible loans that you can pay any time without monthly payments.

As a student, another option is to spread your loan over many months. The longer you take to repay your loan, the lower your monthly repayments. If you repay your loan slowly then the interest will mount up, but after a few months of small payments you can choose to clear your debt early.

There may be a charge for early repayment, so check this before you apply.

Loans When Unemployed

If you need a personal loan and you’re unemployed and not studying, you’ll need to find lenders that will accept alternative income.

Some lenders will accept benefits statements as proof of regular income. You can use your benefits to make your loan repayments, just as you would with a salary or regular wage.

You can also increase your chance of approval by applying for secured loans, backing them with something you own. Commonly, people apply for logbook loans and use their cars as security. If you have a car, you should only choose this option if you can manage without it. It’s risky applying for any loan without a regular income, and that’s especially true if your lender could take your car away – so if you need your car for job-hunting or for transporting children to school, it’s not an option you should take lightly.

According to StepChange, 34% of people who seek debt support are unemployed – although these may be people who were unemployed when taking out credit, and then lost their job.

Risks of Loans When Unemployed

If you don’t have a regular income, or if your income is from benefits, lenders are less likely to trust you. They’re taking on a big risk, accepting that many things could stop them from getting their money back. As a result, they’ll make life harder for you as their borrower.

Lenders will charge high interest rates, increasing the cost of your loan. It’ll be more expensive for you to borrow than someone with a regular income. You could have to pay back double what you borrowed, as is the case with many short-term payday loans.

Lenders are less likely to approve your loan application. In these situations, instant loan approval is almost unheard of. You may have to send evidence of student loans, or evidence of benefits payments. Getting a loan when you’re unemployed can take a lot longer than usual.

You stand more chance of loan approval if you can find a guarantor. Your guarantor agrees to pay your debt if you can’t manage it. If you’re a student, a parent or guardian might be happy to back guarantor loans.

You can show them how you’ll repay your loan. As an unemployed adult, it can be harder to find a guarantor. You’ll need someone that trusts you to pay back what you owe so that they’re not chased for debt.

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Loans When Unemployed and Not on Benefits

There are cases where adults need personal loans and aren’t on benefits but are unemployed. This might be the case if your partner earns an income whilst you’re looking after the home, or you’re between jobs but have been getting by on savings.

If your partner has proof of income, it is often best for them to apply for any credit. If you’re between jobs and savings have run out, you’ll need to find a lender that will consider your current circumstances. You may be approved for a personal loan if you can show that you’ll be earning a regular income very soon.

Most loan decisions, for online loan applications, are processed by a computer. The computer checks the data you’ve provided and makes a lending decision. If you need a more personal decision, in circumstances not covered by an online form, it’s often best to speak to your bank or contact your local Credit Union. You’ll need to explain how you’ll pay your money back, with proof of upcoming income.

Hardship Funds for Unemployed

If you’re unemployed, you can also look for hardship funds provided by the government or charity. These often come in the form of interest-free loans or non-repayable grants. Hardship funds can help in financial emergencies, covering essential bills or the purchase of a new home appliance. You could also get a loan for workwear, or other costs associated with starting a new job.

Applying for Loans When Unemployed

Before you apply for a loan, check if the lender advertises loans for people on benefits. Many lenders won’t even consider it, and rejected applications leave negative marks on your credit file. As well as wasting your own time, you could be harming your chances elsewhere.

Make sure that you’ve got all the evidence you’ll need for your loan application. Get copies of your benefits statements if you don’t have them already. For more help applying for loans when unemployed, check our loan and debt guides.

You can also speak to one of our trusted financial partners, who’ll help to guide you through the process of applying for a loan with no salary or wage coming in.

Quick Loan FAQs

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How Can Money Savings Advice Help You With Getting a Loan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading loan broker companies. They have already helped thousands of people get the best loan that suits their needs, and they can do the same for you.

Choosing an independent loan broker means they won’t proceed with an application unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these loan brokers who can help you get a loan, then click on the below and answer the very simple questions.