For anyone who wishes to avail a Personal Loan, more often than not, a steady income stream with some form of stable employment is considered essential, as a way of affirming the applicant’s ability to repay the loan. Since a Personal Loan is an unsecured loan, the lender takes on a high risk by lending the amount, without any loan security. Thus most lenders require Personal Loan applicants to furnish a valid proof of employment, as well as proof of income.
However, it is understandable that there may be certain situations in which an individual might find herself unemployed. Some of the most common situations could be:
When the individual is a recent graduate, who hasn’t started working yet
When the individual is making a career shift, either from a job to a business or from a business to a job.
In such cases, it may become a little tricky to get the desired Personal Loan. However, with right financial advice, this hurdle can also be crossed.
Well, a lender may offer loan to unemployed individuals in some special cases. Let’s discuss the various underlying aspects:
Most banks offer Personal Loans to individuals in the age bracket of 21 to 65 years. If you are in this age range, consider it as a positive for your application approval.
A good Credit Score can take you a long way in proving your creditworthiness to the bank, and get an approval on your loan application. A Credit Score of 700 or above is a must criterion to avail any of the top loan offers such as SBI Personal loan and Yes Bank Personal loan.
A great way to prove your repayment ability is by exhibiting your ability to earn. You can do so, by offering copies of your bank statements or IT returns, from an earlier time when you were employed and enjoyed a steady flow of income.
As a previously salaried individual, it would prove to be in your interest if you had an overall work experience of 2+ years in the past. If, on the other hand, you were a self-employed individual, and have experience of at least 3 years, it would help turn matters in your favour.
Even in the face of employment, if you enjoy some form of income sources such as those from rental properties, creative outlets, shares, and dividends, etc., you can offer a proof of the same to the lender. This will significantly increase chances of a loan approval on your application.
Just in case you have an offer letter from a reputable organization, promising you of a creditworthy compensation, you can use the same to support your Personal Loan application.
First things first, approach a bank where you are already a customer. Employed or not, you may have a bank account. If so, try making the best of your relationship with your existing bank, and apply for a loan there. Considering they already have a fair idea of your finances, and would be able to trust your ability to repay, getting approval on your application should be easy.
Then again, you can also try approaching a co-operative bank for this purpose, as their eligibility criteria for short term loans aren’t that stringent.
If not a commercial bank, you may consider approaching an NBFC or an online lender with your Personal Loan application. NBFCs are usually more lenient with their loan approval procedures, and if they find substantial proof of your ability to repay the loan, they will be quick to approve your application.
Yet another way of ensuring that you get a loan without enjoying steady employment is by applying for a secured loan. To do so, you will be required to pledge a property, gold, or a fixed deposit account, in exchange for the loan amount. Since the added security helps reduce the risk proposition borne by the bank, it will make it easier for you to get an approval on your loan application, that too at a fairly low rate of interest. Of course, if you fail to make the repayments in time, the bank will hold the right to seize and even sell off your pledged asset.
We hope that you are now aware that getting a Personal Loan for unemployed individuals is possible, subject to proof of their repayment capacity.
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