How to get a Personal Loan if Unemployed?
With the digitized process everywhere, getting a personal loan is the most convenient option these days to beat the financial crunch. Gone are the days when we would have to stand in long bank queues with a bundle full of documents. With internet bank facility, everything is just a click away making the financial world easy and comfortable for all of us.
However, one of the major misconceptions that people believe in today is that if one is unemployed, getting a loan is not possible. The reality, on the other hand, is that lenders will still consider giving a personal loan for unemployed individuals. But there are certain parameters that the lenders will look into before approving any loan, which are:
- Regular Income: If you are unemployed, you still need to show a regular income or source of income to make loan payments
- Credit History: Lenders would want to see how often you have made payments on time in the past and look for any negative report that might show up on your credit history.
- Credit Score: Credit score is one of the important aspects that the lender will look into once anyone applies for a loan. The chances of approval are higher if you have a good credit score.
The most important thing to know before taking a personal loan for unemployed is that you need to be able to repay it on time. This is what the lenders usually consider when reviewing a loan application. Whether they think you can make the payments or not depends a lot on how much you are planning to borrow and what type of income you can show to your lender. The requirements may differ from lender to lender so it is important to check all the details with the lender before applying for any loan. Some of the requirements include:
- Higher interest rate means you could end up paying more on the interest charges
- Automatic Payments deducted from your bank account
- Shorter Loan Length, means, paying back the money faster
If you were getting steady income earlier and had excellent repayment history with your bank, then you can apply for a loan with your bank. The three things that they will check include credit history, income tax returns and employment history. A good credit score will turn out to be a plus point proving you are not likely to default in the coming time.
Another quick and easy option is to get a personal loan for unemployed individuals from Peer to Peer lending companies. The main objective of these companies is to provide instant loan with a seamless online process. People with no job at the moment should definitely consult the financial NBFCs as the interest rates might be less as compared to the banks that offer Personal Loans.
Usually, the banks and the NBFCs have one basic condition that to avail a personal loan, the individuals have to be either salaried or self-employed and these criteria can differ a bit across the different financial institutions.
Personal Loan Eligibility Criteria:
- The minimum age requirement is usually close to 21-23 years with maximum age permissible at the completion of loan tenure is 65-70 years.
- An individual should be either salaried or self-employed in order to show the income source and history to the lenders.
- The credit score or history plays a vital role in determining the Personal Loan eligibility.
- In terms of business continuity, for salaried professionals, you should be in the same job for at least 6 months and should have an overall work experience of 2 years. For self-employed, you should be in the business for a minimum of 3 years and with a work experience of 3 years as well.
Documents required for Personal Loan:
- KYC Documents: Proof of identity, Address Proof, DOB Proof
- Proof of Residence
- Income Proof (audited financials for the last two years)
- Last 6-month bank statement
- Proof of residence or office ownership
- Proof of continuity of business
These details may vary from bank to bank and a few may ask for some additional details like your contact details, the company you are employed with, the relationship you share with the bank and the EMIs you are currently paying and will continue to pay per month. This short list is aimed at improving your chances of being approved for personal loans, especially if you are unemployed at the moment. However, the same logic holds true for other forms of credit such as home loan, credit card, car loans etc.