We occasionally require loans to help us achieve some of our life goals. But before disbursing loans, lenders go through a thorough credit appraisal process. They start by examining your credit history and payment capacity. You can easily obtain a loan if you have a consistent source of income, such as a salary or business revenue. However, many lenders won’t be prepared to provide you a loan if you’re unemployed and don’t have a reliable source of income. You can be unemployed, going through a career change, or just getting your start-up business off the ground. Another group of borrowers includes pensioners, housewives, and those who are currently enrolled in school.
However, even without a proper source of income, you can get a loan. Many financial institutions in India offer loans to applicants who do not have a job. Of course, interest rates, loan terms and other factors are different from loans to income earners, but that will not stop you from getting loans from different lenders. Such loans can be obtained in the form of secured loans, pay-day loans and government personal loan schemes for the unemployed.
Loan options are available for the unemployed in India
If you are in dire need of money, you have no choice but to take out a loan. There are many other options besides personal loans. Many lenders offer loans to the unemployed. The different types of loans offered by lenders are:
Same day loan for unemployed:
Many lenders give loans to unemployed people in a single day. These loans are short-term, and anyone can take advantage of them if they have reached the age of 18. There is no formal credit appraisal process for this loan and can be given to anyone who has a bad credit history.
Unsecured loan:
Unemployed borrowers can also opt for unsecured personal loans. The interest rates for these loans are higher and the repayment period may vary. The best option to go for an unsecured loan is to take advantage of it with a co-applicant so that your application is considered stronger and there are better chances of getting the loan approved.
Loan without a credit check:
A loan without a credit check can be given to someone who is unemployed or has a bad credit history. You do not have to keep any collateral for this type of loan.
Payday Loans:
This is a loan that is given without any credit assessment. The interest rate for a payday loan is higher than a normal loan. The EMI for this loan is deducted from your salary account.
Long-term loan:
An unemployed person can also take a loan which is for a long term and can be availed without any employment record or credit history. These loans are usually made by mortgaging property.
Gold loan:
This is one of the oldest forms of loan. Primarily housewives and retirees may choose to take out this loan. In case of emergency, they can put their gold jewelry to use and take cash instead of pledging it. You can go to your nearest lender branch to opt for this loan which also offers attractive interest rates.
Education loan:
However, this loan is for higher education purposes and only students who are yet to get employment can avail of it. Parents can act as co-applicants in this case. Once a student gets a job or the loan expires, whichever is earlier, he can repay the money in easy instalments.
Government schemes for unemployed people in India
The Government of India has also launched several schemes which provide loans to the unemployed youth of the country:
Prime Minister’s Employment Scheme:
The scheme is designed for the unemployed only. The government provides financial assistance to the youth to start their new venture. Loans offered range from Rs. 2 lakh to Rs. 5 lakh. The amount disbursed is for launching ventures in the advanced industrial sector. Borrowers in the 18-35 age range are eligible for the loan.
Agricultural loan:
Under this scheme, the Government of India provides loans to unemployed youth above the age of 22 years to start their venture in the field. This is especially true for those who are involved in agriculture or want to do so. The government has partnered with several banks and financial institutions to provide these loans.
How to get an unemployed loan?
Unemployment loans are a type of credit given to people with unstable incomes. Credit for this form can be obtained under certain special terms and conditions. This type of loan for unemployed persons is available in the form of personal credits, secured credits, government loans, etc.
Tips for applying for a personal loan
If you are unemployed and want to apply for a personal loan, here are some important things you should know:
-You should apply for personal loan with co-applicant who should be an employed person.
-The interest rate applied to your loan is at the discretion of the lender and may exceed the existing rate of interest.
-If you default on the payment, it can lead to higher penalties.
-You should never apply for a loan more than you can afford
-Make sure you have a financial plan to ensure timely payment.
To conclude
Although you can apply for a personal loan even if you are unemployed, you should avoid taking out a loan unless you are facing a crisis
