If you’re between jobs and strapped for cash, you’ll need to take out a loan more than ever. But you may have a hard time getting approved for one because you lack proof of income. You don’t have a W-2 or 1099, or even just pay stubs to show to lenders. But don’t despair. You can still be granted a personal loan with no income verification. It’s just a matter of knowing how to go about it.
Other factors lenders consider when evaluating borrowers
Proof of income is just one indicator that you can pay back your debts. Lenders will look at other factors to decide whether or not they should give you a loan:
- Credit score — Your history as a reliable payer is important to lenders. It tells them that you pay your loans on time and that you care enough about your credit score to maintain it. So if you have a good credit score, present it to lenders as proof of creditworthiness.
- Alternate income sources — If you’re getting money from other sources like child support, alimony, unemployment benefits, disability benefits, etc., you can show proof for them to lenders. Even income from your partner can work to your favor as long as you can also provide evidence that they support you while you’re unemployed.
- Co-signer — Lenders don’t care who pays them back as long as they get paid back. So if you can get a co-signer with good credit score and proof of income, your chances of getting approved for a loan increases by a lot. The co-signer will pay back the loan if you fail to do so.
Challenges of personal loan with no income verification
Lenders will consider you a high-risk borrower because of your lack of proof of income. As a result, you’ll get higher interest rates and stricter payment terms. This can lead to deeper debt if you end up defaulting on the loan. But if you foresee yourself getting a job or coming into money in some other way soon, you can take the loan as it is with the confidence that you can pay it with no problem.
Another option you have is to get a secured loan instead of an unsecured one. A secured loan is when you hand over an asset you own to the lender if you fail to make payments. This asset will be used as collateral which can get you a better arrangement in terms of interest and schedule. Of course, there’s a risk in this arrangement as well. You’ll end up losing your house or your car if you can’t pay up.
Alternative income options with lower risks
Making money when unemployed can be a real challenge, which is why many people resort to getting a loan to bridge the gap between jobs. But you can find other income sources so that you won’t have to get a big personal loan with no income verification, or not get one at all.
You can work odd jobs like babysitting, dog walking, house cleaning. Or you can use the power of technology and find online gigs such as writing, transcribing graphic designing, and coding. Also, consider holding a garage sale. You’ll get rid of clutter, and you’ll also make a pretty penny at the same time.
If you must get a loan, try getting one first from a family member or a close friend. There’s a good chance their interest rates are better and payment terms are kinder. However, it’s important to stick to whatever agreement you reach to maintain your amicable relationship with them.
A personal loan with no income verification isn’t always the best solution when you’re struggling with money while unemployed because of the risks it comes with. Nevertheless, it’s still a fallback if you have no other option left. There’s no reason to feel hopeless, and that’s always a good thing to remember.