Can You Get a Loan Without a Job?

Put simply, it depends. Before the 2007 financial crisis, “no income, no job, no asset” loans, colloquially known as NINJA loans, were commonplace. But regulations around lending have since become more stringent, and these kinds of loans have fallen by the wayside. Despite that, it’s still possible to get a loan without a job – but there are risks to consider, and approval isn’t guaranteed.

It’s generally not a wise financial decision to take out a loan unless you’re confident that you can pay it back, especially for the types of loans that some lenders offer to “high-risk” borrowers without a steady paycheck or good credit. Before borrowing, make sure you fully understand what you’re signing up for by asking these three important questions:

• Will I be able to pay back the loan? Paying off a loan is more than the “how much,” it’s also the “when.” A missed payment could skyrocket costs if fees or penalties are charged – effectively increasing your loan balance and extending your repayment timeline.
• Do I know the ins and outs of the loan? Loan contracts can be complex and long, but it’s important to take the time to read them carefully. Or, ask a trusted financial professional to do this for you. For example, what may seem like a “too-good-to-pass-up” interest rate may have a variable annual percentage rate (APR) that could balloon after a period of time. Doing your due diligence can help you avoid getting stuck with debt you can’t repay.
• Is this loan my best option? Before taking out a loan, think about what the money will be used for and what’s at risk. Is it worth risking your house or car as collateral? If you do need the loan, is this the best financing option for your needs, or should you shop around a bit more? Many loans available to no-income borrowers can cost more than they seem to, so be sure you’re making the right decision.

Even without a regular paycheck, you may have incoming cash from other sources. Some common nontraditional income that lenders might consider when determining your ability to repay include:

• Supplemental earned income. In addition to income from a regular paycheck, the IRS also considers “earned income” wages from a 1099, or self-employment; benefits from a union strike; certain disability benefits; and combat pay.¹
• Benefits. Cash sources like unemployment, worker’s compensation, pensions, or Social Security are often included in a loan application.
• Court-issued funding. Payments like alimony, child support, or settlements can show the lender you’ll be able to afford your scheduled payments.
• Investments and funds. Trust funds, dividend payments, and accrued interest can help, too. Even small amounts can add up to establish your financial strength.

Choosing the right loan can help ensure that you’ll be able to repay it. Always read the fine print carefully and understand repayment terms. Here are some types of loans that may be available to borrowers without a job:

• Secured loans. A secured loan is backed by collateral, like a house or vehicle, which may boost chances of loan approval. But be careful, as assets could be at risk of repossession if payments aren’t made.
• Unsecured loans. An unsecured loan, such as a typical personal loan or student loan, only requires a promise to repay. These can be harder to come by without steady income, so read the fine print carefully. Look out for high interest rates and late-payment penalties.
• Payday loans. These are short-term loans, usually given to cover borrowers until “payday.” Payday loans are prohibited or regulated in many states and often carry high interest rates.² For example, in California, payday loans have a maximum fee of 15% of the loan amount. But when that fee is extrapolated, it’s equivalent to an APR of 460% – meaning you’d be paying a $45 fee for a $300 loan, for example.³
• Payday alternative loans (PALs). PALs are offered by federal credit unions for small amounts between $200 and $1000, with repayment terms ranging from one to six months. PALs have additional protections for borrowers’ fees that regular payday loans do not, making them a safer alternative.⁴
• Car title loans. Like payday loans, car title loans often carry high interest rates but use a vehicle title as collateral. Even though they are often marketed as “short-term” loans, many borrowers end up unable to pay on time and are left paying large fees or losing their vehicle. In fact, according to a May 2021 Consumer Financial Protection Bureau (CFPB) report, nearly 90% of auto title borrowers were still paying for their loans more than a year after taking out the loan.⁵

Whatever kind of loan a borrower chooses, it’s wise to be aware of the terms, which may include variable APRs that could increase over time or “rollover” fees that increase the cost of the loan if it isn’t paid on time. Many borrowers get trapped in a cycle of ever-growing fees that quickly overshadow the original loan amount. Try to avoid taking out loans unless you are confident that you will be able to repay them.

Here are some steps you can take now, before applying for a loan, to help increase your chances of approval.

• Get your documentation in order. Even without paystubs, items like your ID, proof of residency, bank/credit card statements, and any supplemental cash records can help establish your identity and show insight into your finances. If you recently got hired for a new job, bring a welcome letter or contract – it can help prove that you’ll soon have a steady source of income.
• Check your credit score. A good credit score can show a lender that you’re likely to be a trustworthy borrower, even if you’re currently out of a job. If your score isn’t high enough to get a loan from your preferred lender, check for errors or take steps to improve your credit behavior, such as making on-time payments and lowering your credit utilization ratio.
• Establish collateral. If you own your own home or vehicle, you may be able to use them as collateral to secure your loan. But be careful: If you fail to pay off your loan, collateral can be repossessed or sold.
• Find a cosigner. If you have someone you trust – and who trusts you – consider asking them to cosign the loan. They will also be responsible for the loan’s terms, so if you fail to repay, it will affect their credit history.
• Shop around. No-income loans can be a challenge to get, but different lenders have different approval standards. The more you research, the better your chances of finding a lender that will help you get the financing you need. Just be sure to do all rate shopping within a short period so that FICO and VantageScore reflect all loan-related hard inquiries as one hard credit inquiry. A single hard inquiry can cause a minor, temporary ding to your credit score, whereas multiple hard inquiries can have more severe credit consequences.

Anyone who takes out a loan while unemployed can usually expect that it might have a higher interest rate. If the borrower isn’t careful, this can end up creating more financial problems than they solve. Before taking out a loan, consider alternative options and their potential risks, such as:

• Credit cards and lines of credit. Revolving credit, like credit cards and lines of credit, can have interest rates that may be more favorable than an easy-to-get loan like a payday loan or title loan. However, revolving credit can carry similar risks to loans, as interest charges can accrue quickly and lines of credit based on assets, like a home equity line of credit (HELOC), can put you at risk if payments are missed.
• Cash advances. Many credit cards offer cash advances – a way to borrow cash against your card’s credit limit. But compared to standard credit card purchases, cash advances often have higher interest rates, additional fees, and no grace period.
• Borrowing from friends and family. For a quick cash injection, friends and family may be able to help get you through financially tough times without high interest or fees. But borrowing from personal contacts can have its own set of complications, so tread carefully. The CFPB has a helpful worksheet to help navigate those complexities.
• Community centers. Many communities have ways to help people in a financial pinch. From food pantries to finance seminars at the local library, the help you need might be right around the corner.
• Tapping into your 401(k) or IRA. If you have a 401(k), you may be able to tap into it for certain purposes, like eligible medical expenses. But there may be restrictions and notable tax implications, so it’s best to speak to a trusted financial advisor before consuming any of your retirement savings. Similarly, if you have a Roth IRA, you can withdraw contributions tax- and penalty-free.