Steady income is the most important decisive factor when it comes to personal loan. Based on your income, application is either approved or rejected. However there might come a time when you go jobless. And not being in job/unemployed is very common scenario in today’s world.

And in such situations, shortage of money is obvious assuming you have a very limited savings. But at the same time, when you apply for loan; the application is going to get rejected, as there is no income.

Personal Loan for Individuals with No Job

So can you get personal loan when jobless i.e. at a time when you badly need the money? Answer is YES, it is possible. Because your income is not the only factor, on the basis of which loan application is decided. There are several other factors such as:

• Credit history
• Employment history
• IT returns

Now there could be various categories of jobless as follows:

• Who have been in job earlier but are currently unemployed
• Who are searching for job for the first time especially recent graduate
• Who were in business earlier but are now looking for the job

In this article, we’ll discuss about the first category of individual i.e. who were earlier getting steady income but due to some reasons, they are currently jobless and seeking for personal loan.

Ask your existing bank:

If you were getting steady and high income earlier and had excellent repayment history with your bank (especially bank with whom you had salary account), then you should first apply for the credit at the bank. The three other factors mentioned above such as credit history, employment history and income tax returns, can come to your rescue at this point.

Especially a good credit score, proves that you are not likely to default in the future. And assuming your income was high, it is likely expected that your future income will be mostly on the higher side and repayment will be done in a timely manner. There is also a possibility that, interest on loan might be on the higher side, but still you will get access to cash, in the financial crunch phase.

If commercial banks deny your application then you can also try to get loan from co-operative banks. The chances of approval are high as their eligibility criteria are not very stringent.

Peer to peer lending companies:

Another quick and easy option for unemployed individuals to get personal loan is from peer to peer lending companies (also called as P2PL). The prime objective of P2PL marketplaces is to make access to credit in a seamless and affordable manner. When we say affordable, it means the interest rate offered is less compared to the commercial banks. People with no job in hand currently, should definitely approach these online money lending marketplaces. There are many individuals who are ready to borrow their money with interest rate less than the banks. Read more on P2PL benefits.

Ask your friends/relatives:

Ideally this should be / is the first option, an individual takes into consideration when in need of money. However not everyone has capacity to provide helping hand even when mutual trust exists. But what you can do is, ask your acquaintances to lend money but in return of interest. Chances are quite higher that, you may get money. Because your acquaintance has some monetary advantage. Many times, people have in mind that what will I gain after lending the money? So being practical helps in such conditions.

Against fixed deposit:

If you already have fixed deposit with the bank, then loan against FD is another feasible option, provided you do not want to break FD to raise the money. It is actually a loan against security. In this case, security is the money you’ve kept in fixed deposit. And the credit you can get is around 75%-80% of the money kept with the bank and an additional interest of 2%-3% is charged.

So if the FD interest rate offered by the bank is 10% and bank charges 2% additional borrowing charge then you will have to pay 12% rate per annum, which is monthly 1%. So as you can see, the interest rate offered is very less than the standard loan rates which are typically above 15%. There are few more benefits apart from lower interest rates such as:

• No pre-payment and processing charge, with most of the banks
• Repayments are flexible with an option of paying either lumpsum or in instalments

Against life insurance policy:

Similar to loan against FD, if you have life insurance policy on your name, then you can get loan against life policy as well. And the benefit remains the same as mentioned above i.e. low lending rate. However remember that, the policy is transferred in the name of the financial institution and post that only, the loan is granted. The lending rate is calculated on the basis of two factors: premium amount and the number of times premiums paid till the time of application.

Private money lenders:

These private financiers offer loans especially to local borrowers. However the interest rate are very high and many of operate without getting license from the government. And most importantly, the kind of harassment borrower faces in an event of non-payment of dues, is very bad.

So basically the above listed six options to get personal loan for jobless individuals has its own pros and cons. But remember one thing – always have a good credit history. It is very important for a good financial future.