money is that often banks will only lend money to those who have it. It is part of the classic rule that means money loves money and only the rich get richer. If you are trying to kick start a business or get out of a hole a bank will only help you if you can prove you have the money to back it up. This is often the paradox that leads people to use more predatory lenders who are looking to take advantage of people in dire situations. One of the toughest times to get a loan is when you are out of work and that is unfortunate as that may be the time that you really need a loan.
Getting a loan without a job is not impossible but it is very difficult. When you apply for a loan a bank looks at your ability to pay it back. If you have no savings and no form of income, you have little chance of securing that loan. A bank’s key tool in deciding whether to give you a loan or not is something called the debt-to-income ratio. This basically measures how much money you owe versus how much money you make. If you don’t make any money then you are likely out of luck.
There are some ways to get a loan without a job though so don’t give up just yet. To get a loan without a job will be a lot more work but it can be done. The first step is to do your research. Look at all the banks in your area and check if they list any loan requirements on their websites. Book meetings with all of their loan advisors. This will be a hard process and you will be refused many times but one may say yes.
To get a loan without a job these financial institutions will either need to see a good line of credit in your history or a secondary source of income. This secondary source of income could be unemployment benefit, it could be a disability, it could be rent from a house you own. Whatever way you are getting money in, list it.
The other way to get a loan is to have some co-sign the loan agreement. This is not an agreement to enter blindly but it could be a good option if you are sure you will be able to repay the loan again soon. A co-sign is someone who agrees to take on the risk with you and uses their income and credit to get you the loan. In many ways, all the risk is on them because if you fail to pay back the loan their credit score will take a lot of damage they will also be the ones held to repay the loan. Only do this if you are really sure you can pay it back soon.
One other way to have a chance of getting a loan is to have proof of employment in the future. While you may not have work now if you can prove that you will have work in the future it may help to convince a bank to help you out. During a time like the coronavirus lockdown, many people lost their jobs. However many of these people were told that they would have their jobs back once the economy restarted. A letter explaining this fact may be enough to show a bank that you will be able to pay back a loan in the future. With the right preparation and the right approach, even someone without a job has an outside chance of securing a loan.