How to get a hardship loan if you are unemployed
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If you are unemployed, a hardship loan can help you stay afloat financially. (Shutterstock)
If you’re having trouble keeping track of your bills, you may qualify for a financial hardship loan. You can apply for this type of personal loan to cover financial losses related to emergencies such as medical bills, car repairs, or home repairs.
If you are unemployed hardship loan can help you stay afloat until you find another job. Some financial institutions even specialize in lending money to borrowers with poorer credit ratings or low incomes. This is what you should know about hardship loans.
Where can you get a hardship loan?
You can use a hardship loan to cover most household expenses, including bills, groceries, rent, and utilities. Since many hardship loans have shorter terms, you should only take out as much as you need.
Applying for a hardship loan is quick and convenient, and you have multiple lender options.
online lenders
Filling out an online application is the quickest way to apply for a hardship loan. You can fill out the application as you wish, which usually only takes a few minutes. If you apply later in the day, you may have to wait until the next day to finalize some details. Many online lenders offer financing in as little as 24 hours after loan approval. However, some lenders may take a few days to process the application and deposit the loan funds.
Visit Credible quickly and easily Compare personal loan rates from different lenders, all in one place.
banks and credit unions
While online lenders might be more convenient, it might be easier to get a loan from a bank or credit union if you’re unemployed or struggling with your credit. Applying to your current bank or credit union might make qualifying easier since you have an existing relationship with them. Check with a loan officer at your bank or credit union to see if they offer hardship loans.
Can you get a hardship loan if you are unemployed?
It is possible to get a hardship loan if you are unemployed. But without a steady paycheck, you may need to show proof of other income, such as unemployment benefits, retirement income, child support, child support, or Social Security payments.
Some lenders have minimum income requirements as low as $12,000 per year, while others do not set specific minimum income requirements. If you have other sources of income besides employment, you may still qualify for one of these loans.
These credible partner lenders have no minimum income requirement:
- best egg
- FreedomPlus
- lucky money
- Lending Club
- Thrive
Alternatively, you may be able to find help from a national program or local nonprofit organization that offers emergency financial assistance. Some organizations to consider are:
Types of Hardship Loans
There are different types of hardship loans, each with advantages and disadvantages. Once you understand how they work, you can decide which one is best for your situation.
Loans with bad credit
Bad credit loans are personal loans that some lenders make to people with poorer credit ratings. The FICO credit score model classifies scores below 580 as poor and between 580 and 669 as fair.
Lenders who offer bad credit know that borrowers are at greater risk of not paying their debts. If you are approved for a loan with bad credit, you will likely get one higher interest rate to offset the lender’s risk. You also have fewer lender options as many lending companies have minimum credit requirements.
You may consider asking a trusted friend or family member to co-sign a loan if you cannot qualify on your own. Adding a co-signer with a good credit history to your loan application can increase your chances of approval and better interest rates.
Secured Personal Loans
To get a secured personal loan, you must provide collateral such as your home, vehicle, or other valuables. You can use a secured personal loan for a variety of purposes, including debt consolidation.
Secured loans may offer lower interest rates than unsecured ones personal loans because you are taking less risk with your collateral. You can also qualify for better repayment terms and a larger loan amount with a secured loan. The main disadvantage is that if you default on your payments, you could lose your collateral.
Corona hardship loans
During the COVID-19 pandemic, coronavirus hardship loans were introduced to help people who have lost income due to job loss, illness or disability during an economic shutdown. These hardship loans usually have shorter repayment terms and lower interest rates. Sometimes the loans include deferred payments. These loans are available through many online lenders, banks and credit unions.
The benefit of a coronavirus hardship loan is that the interest rate may be lower than what you would normally qualify for and you may still qualify if you are unemployed. The downside is that the Loan amounts can be smallerrepayment periods are often shorter and you may still need to show evidence of an alternative source of income (such as unemployment or a pension).
How to apply for a hardship loan
When you’re ready to apply for a hardship loan, here’s what you need to do:
- Collect informations. Before applying for a loan, make sure you have all the required documentation. Even if you are unemployed, you may be required to provide proof of income or proof of unemployment. You should also have proof of address and identification on hand.
- Compare prices. Compare rates from multiple lenders. While you may have higher interest rates because lenders see unemployment as a higher risk, you can still save money by finding a lender with the best terms for your situation. Don’t be afraid to look around. If multiple lenders are pulling your credit score in a short period of time, the credit bureaus will likely lump them together to limit the impact on your credit score.
- Fill out your application. After choosing the lender you want to work with, fill out the application. If your credit is questionable, consider adding a co-signer. A co-signer with an excellent credit history and stable income could make it easier to get a cheaper loan.
- Complete the loan documents and wait for the funds. Once approved, your lender can deposit your loan funds directly into your bank account. Depending on the loan approval and the lender’s processing times, you may have to wait a few days.
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