Without a Regular Wage or Salary, Borrowing Money Gets More Difficult

Being unemployed doesn’t mean that you can’t borrow money at all. Finding loans when unemployed can be more difficult, but some lenders will accept you for loans where you don’t need a job.

What Is a Proof of Income?

If you don't have a regular salary, you might not be able to get a loan. Lenders require proof of income to show you can afford to make repayments. If you receive Universal Credit, crisis loans are available from the government.

Most lenders want proof of regular income before they’ll even think of lending money. They need to see that the money they give is going to come back in monthly payments. Usually, lenders ask for proof of income in the form of payslips from your workplace.

If you’re unemployed, you’ll need to find loans where you don’t need a job. You won’t have as many options as someone that’s employed, but this doesn’t mean that you can’t borrow money.

Read more to find out how to get a loan where you don’t need a job.

Looking for other information on Loans? This guide has info on 'What loans are available where you don't need a job? We have also writen extensively about:

• - Why some loan applications are rejected?
• - What loans are available where you pay interest first?
• - What loans are available where you can make overpayments?
• - What loans are available that are easy to get approved for?

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.

Loans When Unemployed With Bad Credit

Often, being unemployed goes hand-in-hand with bad credit. Though that’s not always the case, a lack of steady income can lead to problems with budgeting. If you don’t get paid every week, every fortnight or every month from an employer, the likelihood is that you’ll miss deadlines for payments and be late paying some bills.

Without steady employment and a savings buffer, you might also have borrowed more frequently than most for help with those emergency expenses. You might have had to borrow for a car MOT, new appliance or household repairs.

If you’ve got bad credit and no income from employment, you’re not a good prospect for a lender. Lenders know that they have less chance of getting their money back.

Lenders adjust to the level of risk by making changes to loan offerings. If your credit score is low, they’re likely to charge a higher APR for your loan. With a higher interest rate, you’ll pay more overall to borrow the same amount of money as someone with a good credit rating.

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Loans Where You Don’t Need a Job

If you don’t have a job, you need to find a lender that accepts alternative income. Some lenders are happy to treat government benefits as a regular income. You’ll need to show your benefits statements in place of a wage slip or payslip.

You might increase your chances of loan acceptance by offering some form of collateral. This gives lenders another way to get their money back. Securing a loan against something like your car can help to reassure your creditors. It can also help to find a guarantor that’s in secure full-time employment.

If you’re on benefits like Universal Credit, you might get help from a Credit Union. These typically lend to their own members but are much more likely to consider individual circumstance.

If you don’t have a job, you’ll need to show that this won’t stop you clearing your debt. Some lenders are much more relaxed than others, but you’ll still need to give them proof that you have ways to repay them.

Risks of Borrowing When Unemployed

Borrowing money without a job is a very risky thing to do. If your benefits payments reduced or stopped, could you keep up with your repayments?

The likelihood is that your budget is already stretched. You probably don’t have much room for manoeuvre or a way to build up a savings buffer. If that’s the case for you, can you afford your loan repayments without plunging yourself further into debt?

It’s easy to get into a debt spiral, borrowing more money because you can’t keep up with your existing debt repayments. You could get into more and more debt until it’s completely unmanageable.

Risks of Unregulated Lenders

When you don’t have a job or regular income, it’s easy to get swept in by lenders that promise too much. If a lender doesn’t want proof of income and is happy to give money away, then there’s a good chance that they’re not a reputable choice.

No responsible lender will offer a loan that you could never pay back. No reputable lender would give you money without asking for any proof of income.

Before you borrow money, it’s important to check the Financial Services Register. This will ensure that you don’t end up dealing with a loan shark.

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Why Might You Need a Loan?

Being unemployed or made redundant is actually one of the top reasons for people taking out personal credit. When you aren’t earning, whether it’s suddenly happened or you’ve been looking for a job for a while, credit can help you bridge the gap until you find another income source.

According to StepChange Debt Charity, the top 5 reasons for having personal credit are:

Government Loans Where You Don’t Need a Job

If you’re on benefits like Universal Credit, you might get government assistance. The government can offer a budgeting loan or advance to help with unexpected costs.

There are several benefits to budgeting loans and advances, including interest-free borrowing. As these loans are interest-free, you won’t pay back any more than you originally borrowed. In some cases, you’ll be offered a grant that you don’t need to pay back at all.

If you need to pay money back, it’s usually taken from future benefits payments. It’ll be split, so you won’t need to pay everything back in one go.

Government assistance is much cheaper than a loan from a direct lender. You can borrow as little as £100 and pay it back without added interest.

Borrowing Money When You’re Unemployed With Savings

A smaller number of unemployed people fit into the category of loan applicants with their own savings. If you have savings that you’ve set aside and don’t want to dip into for some reason, it can be tempting to apply for a loan and keep your savings balance where it is.

Perhaps you’re trying to save for your son or daughter’s future, but your car needs expensive repairs? There are many reasons why it might feel more difficult to dip into savings than apply for a loan to cover costs.

If you have your own savings, it’s cheaper to use these than it is to apply for a loan. Loans have interest added, so you’ll always pay back more than you originally borrowed. Take money from your savings and treat it like an interest-free loan.

Pay the money back just as you’d repay any other loan, but safe in the knowledge that you aren’t paying extra just to borrow.

Providing Proof of Income for Loans When Unemployed

If you do apply for loans when you don’t have a job, you’ll need to show some proof of income. Lenders will usually accept a benefits statement, or you can show your bank statement with income from elsewhere. For example, you might show that a family member pays you a monthly allowance. Most lenders won’t accept such informal arrangements, but some will be happy to do so.

Make sure that any income you have does come from legal sources. Lenders will look into your financial situation, and you’re likely to get questioned if it looks like your income comes from cash-in-hand jobs.

Lenders will want to see proof that you’ve got income that’s consistent and is being earned legally, even if you would class yourself as unemployed.

Read our guides to find out more about loans where you don’t need a job. Discover borrowing options and tips to help you to manage your money.

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.