Applying for a Loan When You’re Unemployed?

Learn why you might qualify for a personal loan even if you’re unemployed


Being unemployed can be extremely stressful. And if you’re thinking about getting a personal loan to help you through a tough time, you probably have a lot of questions running through your mind. Can you get a loan without a job? What types of personal loans are there? And what are the risks you should consider? 

Here are some things you should know about getting a personal loan without a job and some questions to ask yourself before taking on any new debt. 

Things to Consider Before Taking Out a Personal Loan 

If you’re unemployed and applying for a personal loan, there are some things you should think about first. Taking out a personal loan can have short- and long-term financial consequences that you should be aware of. 

Here are a few questions to ask yourself—or a qualified financial expert—before taking out a personal loan while unemployed. 

Can You Make On-Time Payments? 

With any debt, you should think about whether you can consistently make the minimum payments on time. Late payments might affect your credit score and can come with late fees. And if you can’t pay back the loan, the lender might be able to start debt collection, file negative information on your credit report, take your property or even sue you. 

Do You Understand the Terms of the Loan? 

Make sure you understand the terms of the loan completely. That includes things like the interest rate, payments, fees, penalties and more. 

Do You Know the Risks? 

When looking at a personal loan, it’s not a bad idea to think through the best- and worst-case scenarios. Here are some questions to consider:

  • Is a personal loan your best option? 
  • What could happen if you can’t make payments? 
  • Could you lose your car or home? 
  • Considering interest, what will you likely end up paying in total? 

If you can, talk to a qualified financial expert to understand the potential risks. 

Common Factors Lenders Consider

Every lender has different credit policies that they use to determine whether a potential borrower is likely to repay their loan, which is also known as credit risk

Some common things lenders might look at include your annual income, debt-to-income ratio, payment history, credit score and more. 

But what happens if you’re looking for a personal loan while unemployed? Do you need to have traditional income from an employer to get approved for a loan? 

What Counts as Income? 

If you’re applying for a personal loan without a job, lenders might still require proof of income. But it doesn’t necessarily have to be income from an employer. 

According to the IRS, some other things that might be considered income include

  • Alimony
  • Certain disability payments 
  • Unemployment benefits
  • Interest and dividends
  • Social Security payments
  • Pensions or annuities
  • Child support

So if you’re wondering how to get a loan without a job, you might want to think about whether your alternative sources of income can support a loan payment. 

Types of Personal Loans for Unemployed Borrowers

If you’re looking for financial relief while you’re unemployed, be aware that there are some types of credit you may want to avoid. And it’s important not to overlook the serious risks that could come with them. If you’re unemployed and considering a personal loan, make sure you understand your options before you make any decisions.

Here are some things to know about a few common types of personal loans. 

Secured & Unsecured Loans 

According to the Federal Trade Commission (FTC), secured loans are linked to an asset, like a car or a house. Unsecured loans, on the other hand, are loans that aren’t tied to an asset. 

If you’re deciding between a secured or an unsecured loan, there are things to consider about each option. For example, if you can’t pay back a secured loan, the lender might be able to take your property to get its money back.

According to the Consumer Financial Protection Bureau (CFPB), lenders might consider unsecured loans to be riskier than secured loans—and unsecured loans may have higher interest rates. And keep in mind that lenders can still take action if you don’t pay back an unsecured loan. That could include starting debt collection or suing you. 

Payday Loans 

A payday loan generally describes a short-term, high-cost loan that’s designed to be repaid on your next payday. The terms and structure can vary by state, lender and the individual loan. But payday loans can come with unique risks and are even illegal in some states. So if you’re considering a payday loan, make sure you fully understand the terms and risks. 

Cash Advances

Some credit cards let you borrow a portion of your credit limit in cash. This is known as a cash advance and is another kind of short-term, high-cost loan. Using your credit card to get cash from an ATM is expensive, and cash advances might have additional fees, too. Plus, interest rates on cash advances are typically higher than interest rates on regular credit card purchases. 

Debt Consolidation Loans 

If you’re struggling to stay on top of all your bills, you might decide to combine—or consolidate—all your debt into one loan payment so you can focus on paying a single bill. 

According to the FTC, some debt consolidation loans might require you to put up property as collateral. And the CFPB reminds consumers that debt consolidation loans don’t erase your debt. In some cases, you could end up paying more by consolidating debt into a different kind of loan. 

What if You Don’t Qualify for a Loan? 

If you’re unemployed and don’t qualify for a loan, there are still ways you can start to plan financially. 

  • Evaluate bills and take steps to reduce expenses. If you can’t make payments on your bills, credit cards or other loans, the CFPB recommends working with companies and lenders directly. And if you’re a Capital One® customer, you can reach out directly to talk about available resources. You might also want to consider cutting nonessential expenses
  • Evaluate your savings and emergency funds. If you have money in a savings account or emergency fund, now might be the time to use it. And if you’re thinking about tapping into your retirement account early, make sure you’re considering all the factors. Again, every situation is different and it’s a good idea to speak with a qualified financial expert if you can.
  • Explore alternative sources of income. There are online businesses that pay people to take surveys, participate in user testing, proofread content and more. Just make sure to watch out for scams
  • Look for other aid. There are nonprofits and other organizations that offer aid for service industry workers, freelancers and people struggling with medical expenses. And if you need immediate help getting food, you can learn more about how to access food banks
  • Keep an eye on your credit score. It can be easy to forget about your credit score when you’re dealing with financial uncertainty. But maintaining a good score can help you in the long run. With CreditWise® from Capital One, you can access your free TransUnion® credit report and weekly VantageScore® 3.0 credit score anytime without negatively impacting your score. And if your credit isn’t where you want it to be, there are some things you can do to help improve your score.

Explore Your Options

Before you make any decisions about personal loans, it’s important to explore all your options and research the pros and cons of each decision. If possible, it’s a good idea to talk to a qualified financial expert about your situation.


Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

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