Obtaining personal loans is hard, and it’s even harder when you don’t have stable employment. After all, a lender wants to ensure that you have the financial capacity to repay the loan. So, when you don’t have a source of regular income, then it can raise big and bright red flags for the lenders. However, that doesn’t mean that it’s impossible to get a personal loan at all.
How to Get a Personal Loan When You Are Unemployed?
The most important thing that you have to understand is that irrespective of whether you are employed or not, you have to share proof that you can repay a loan. No lender will approve a loan if they don’t have a clear idea about how you are generating income and whether you can save enough to pay the EMIs every month. So, if you are earning money through other means such as a business or maybe freelancing, then you can share the details of the same to assure the lender that you can indeed repay the loan.
There are many other ways to obtain an HDFC personal loan, SBI personal loan, etc. easily. These are:
One easy way to get your bank to approve your loan application is to turn your standard loan into a secured loan.
Personal loans, in general, are unsecured loans. In other words, you don’t have to offer collateral such as real estate, gold, bonds, etc. as security. However, you can choose to convert your personal loan into a secured loan of your own accord. When the loan is secured against a tangible asset, then a lender is more comfortable in sanctioning the loan amount knowing that if things went south, it can obtain the rights of the asset and sell it off to recover the money if necessary. However, this also means that you are at the risk of losing whatever you offer as collateral if you are unable to repay the loan. So choose wisely.
There are some banks that might be willing to give you a loan granted you are comfortable with an interest rate that’s higher than the standard. This is of course to make the deal more sense to them as they are lending money to someone who doesn’t have a job at the moment. In other words, they balance the risk with a higher interest rate i.e. a higher profit.
Peer-to-Peer (P2P) loans are instant loans that are offered by Non-Banking Financial Companies. These are ideal for you if you are unemployed or you want a personal loan without CIBIL score check.
P2P loans are usually offered via online platforms and mobile apps, which means they are easily accessible. You don’t even have to step out of your house as you can upload the required documents in a digital format and for verification, the lenders generally send a representative to your home when you are available.
The reason why P2P loans are perfect for those who are unemployed is that these are far more forgiving than traditional loans. They use advanced methods for risk-assessment which don’t heavily rely on your income status but rather your financial history and spending habits in general. This is the reason why you can get a personal loan without CIBIL score on P2P platforms so easily compared to traditional banks.
Loan Against FD
If you have made a fixed deposit investment with your bank, then you can use that to get a loan. This is because the bank uses the FD as security in case you fail to repay. Another benefit of this option is that the paperwork is less as the money is already there with the bank. The only problem that you may encounter is the availability of the option in the first place. For instance, HDFC personal loan offers this facility, but small banks may not offer the same.
When you do get personal loan because of unemployment, make sure that your credit score stays protected as that can help you a lot in the future if and when you need another loan or credit card. Good luck!
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