Believe it or not, it is still possible to borrow money if you are unemployed. Here’s what you need to know.

Unemployment can lead to a distressing financial situation. Even if you carefully built an emergency fund for situations like this, eventually, the funds will run out.

If you don’t have a new job lined up and cannot keep up with your expenses, then turning to a personal loan while unemployed could be an option for you.

Although not all unemployed individuals will qualify for a loan, some lenders are willing to work with you. If you can find the right loan, then it could give you the financial breathing room you need while you continue searching for a new job

Let’s explore what types of loans are available for unemployed individuals and how you can get one. 

How unemployment affects loan eligibility and terms

Unemployed? Emergency Loans Are Still Within Reach - How unemployment affects loan eligibility

In most cases, unemployment means that you’ve lost all of your income or at least the majority of it. With that, it is not surprising that your unemployment will affect your loan eligibility and terms. 

A lower income is not the only way that your loan eligibility could be affected. With a lower income, your debt-to-income ratio will likely be affected. At that point, your credit score could take a hit because your debt-to-income ratio is a major component.

Essentially, this amounts to a double whammy effect on your ability to take out a loan. You’ll likely find that most lenders aren’t willing to work with you. Those who are willing to help you out with a loan typically require large interest charges for that opportunity. 

As you continue to explore your loan options while unemployed, keep in mind that you probably won’t have access to the best loan terms. But you will likely be able to find a loan that helps get you through the financial hardship. 

What types of loans are available for people with little to no income?

If you have no income, then your loan options will be limited. But a few that you can pursue include:

  • Personal loans. Personal loans often are available to those who are unemployed. But you’ll likely be facing higher interest rates due to a less attractive application. However, this issue could be solved by finding a cosigner with a good credit score and stable income to vouch for you.  
  • Secured loans. With a secured loan, you put an item of value on the line to bank up your promise to repay the loan. Since this is less risky for lenders, you might find better terms. But you’ll risk losing the item if you are unable to repay the loan. 

With little to no income, you can still pursue these types of loans. 

What to consider before taking out a personal loan while unemployed

Unemployed? Emergency Loans Are Still Within Reach - What to consider before taking out a personal loan while unemployed

Before you dive into the deep end and apply for the first personal loan that will accept you, take a minute to consider your options. Although you might feel like you are at the end of your financial resources, stretching things out as far as possible is important. 

When you take on a personal loan while you are unemployed, you may add additional financial stress to your situation. Unless you have an end in sight, taking on more debt could lead to more financial troubles. 

But if you’ve exhausted all of your options – then taking out a personal loan to cover your basic expenses during this crisis is an avenue that you should explore. 

How to get a loan when you are unemployed

If you have decided that pursuing a personal loan is the best course of action, then here’s what you’ll need to do. 

Consider your other income sources

Although you are unemployed, that doesn’t necessarily mean that you have no income. There are other income streams that lenders will be able to take into consideration. 

Here are some sources of income that you should include in your loan application:

  • Disability and Social Security benefits.
  • Investment income.
  • Rental property income.
  • Retirement income.
  • Child support.
  • Alimony.
  • Self-employment income.

With even a little bit of reliable income from an unconventional source, you could have a better chance of obtaining a loan. 

Where to find a loan when unemployed

If you are unemployed, searching for the right lender will be a little different than normal. You’ll need to seek out a lender that is willing to work with your income – or lack thereof. 

Luckily, there is a platform that can help you accelerate your search – Monevo. 

Monevo is a free platform that will allow you to shop for a personal loan quickly. After entering your information, you’ll find offers from multiple personal loan providers in one place. As a part of the initial questionnaire, Monevo will ask you about your annual income. With that, they can help you narrow your search to lenders that can work with your level of income. 

You won’t have to impact your credit score when you fill out a questionnaire with Monevo. But the platform will search through more than 30 top lenders in under a minute. That should help you find the loan you need with a lender that is willing to work with you. 

How do you qualify for a loan if you don’t have an income?

Unemployed? Emergency Loans Are Still Within Reach - How do you qualify for a loan when you have no income

You might be surprised that you can qualify for a loan while you are unemployed. But you’ll likely need a strong credit score and another source of income. No matter how minimal your income stream might seem, it could make the difference to help you obtain a loan. 

Talk to a cosigner

If you truly have no income coming in at all, then talking to a cosigner could be the right move. 

A cosigner is someone that agrees to take full responsibility for the debt if you are unable to repay it. With that, only close family and friends will likely consider becoming a cosigner. If you find a cosigner with a strong credit score and solid income, then you may be able to receive attractive loan terms. 

But keep in mind that you are putting your relationship with your cosigner in jeopardy. Even if you fully intend to repay the loan on your own, life might get in the way. Can your relationship with your cosigner withstand such a deep financial blow? Consider the consequences before moving forward. 

Will applying for a loan affect my unemployment benefits?

When you take out a loan, the money you receive is not considered income. Since you are expected to repay the loan, the IRS will not tax the money you receive as income. 

Unemployment benefits are based on your lost income. With that, taking out a loan shouldn’t affect your unemployment benefits. 

What if you can’t find an emergency loan while unemployed?

Without an income stream and a poor credit score, you might not be able to find an emergency loan. But that doesn’t mean there aren’t options to help you improve your financial situation. 

Here are some steps to take that can help you move forward. 

Reach out to your bill providers

Unable to make an upcoming payment? Take the time to reach out to your bill providers. In some cases, they may be able to provide some relief. A new payment plan or a deadline extension could help you stay afloat. 

Importantly, if you have federally backed loans, then you might qualify for a temporary pause to your payments right now. Don’t be afraid to reach out to your loan servicer to ask for details on your payment relief options. 

Look for other sources of financial relief

When you start looking, you’ll find various sources of relief that can provide the financial boost you need. Research local assistance programs that are in place to help you keep food on the table. 

You might find local programs that provide food and financial assistance to help you get through these difficult times. 

Reduce expenses where possible

Of course, you’ve likely already tried to keep your expenses low. But it might be worth taking another look at your budget to eliminate anything that is not absolutely essential. You can always add the expense back into your budget later when you have the funds. 

Improve your credit

If you were unable to obtain a loan due to a bad credit score, consider taking action to give it a boost. With a better credit score, you might be able to find a lender that is willing to work with you. 

Seek out alternative income sources

Without any income at all, it can be difficult to qualify for an emergency loan. But what if you were able to bring in a small amount of income? That could change everything. 

Luckily, there are many ways to try building an income stream. Many take no money to get started. With that, look for an achievable income stream that you can practically tackle in the coming weeks to give your income the slight boost it needs. 

Even if you aren’t able to get a loan, generating a small amount of income can help you cover your expenses for now. 


Obtaining a loan while unemployed may be difficult, but it’s not impossible. In some cases, you can get the loan you need to fund your expenses while you remain unemployed. 

But if you aren’t able to obtain a loan, don’t be discouraged. Instead, seek out ways to improve your financial standing and build some form of income to keep you afloat until you find the right job.

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About the author

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Sarah Sharkey is a personal finance writer covering retirement, investing, debt, savings, credit cards, mortgages, and student loans. Additionally, she is the founder of Adventurous Adulting, a personal finance blog dedicated to helping readers tackle their money and take control of the adventure of life. You can connect with her on LinkedIn or Twitter.