Getting a loan is fairly easy. There are hundreds of lending and financing institutions who are willing to offer you the amount of money you need for competitive rates. If you’ve been a responsible credit manager in the past and have an excellent credit profile, getting a loan shouldn’t be a problem.
But what about those who have lost their jobs and can’t provide legal proof of their income stability?
This is when things hit hard. Lenders are usually wary of risk and borrowers who can’t prove income is a major red flag.
You may think all hope is lost. Fortunately, there are still loan options you can turn to even when you’re in murky waters.
One of the most effective ways to get a loan when you’re unemployed is to have someone co-sign with you. A co-signee takes the risk of the loan and will be held liable once you default on the loan. If you have a friend, a parent, or a close relative who is confident enough of your creditworthiness (and your promises), then applying for that loan is worth a shot.
Your bank may offer personal loans for a short period, usually for two to three years. The loan amount varies from lender to lender. However, there had been those known to offer up to $35,000. If you are a regular customer of your bank and have proven track record in payments, you have a higher chance of being granted a loan.
Credit unions are also very good options for personal loans. Members can take advantage of their reputed low interest rates.
Another option is a peer-to-peer lending platform where the risk is carried by other consumers instead of the banks.
Personal loans are advantageous in the way that they are flexible. You can borrow money to fund a home renovation, to finance your daughter’s college cost, a family vacation, a medical emergency, and whatever is your current need.
Subprime personal loan alternatives are another option if you cannot find a prime lender. In simple, unpretentious terms, they cater to borrowers with not-so-stellar credit. Given the area that they are in, these lenders charge high in interest to compensate for the risk. Know your options first before you get into this alternative.
The US government offers financial assistance, short-term and long-term, to individuals in deep financial need. If you do not want to get into debt with private lending institutions or have exhausted all other lending alternatives to no avail, you can look into grants and financial assistance initiatives sponsored by the government.
Look up the USA.gov website in the internet and search for programs that most apply to you. Loan application may be available online and processing may take two weeks. Be sure to follow up on your application and check your email regularly for updates.
Life Insurance Loans
Universal life insurance policies allow money to be withdrawn from the fund as a loan. This could be an option. However, a major disadvantage of these loans is its price including the fees associated with tapping into the fund.
HELOC or Home Equity Line of Credit
HELOC or Home Equity Line of Credit allows you to tap into your home’s equity and borrow money against the money that you already paid to your lender. If you have already paid a significant amount to your home loan, you could extract a larger sum. There are various HELOC calculators online to help you estimate the money you will be getting. Simply enter your mortgage balance, the appraised home value, and your LTV ratio.
Ask your lender what requirements are needed for a HELOC loan.
Your lender gets squinty-eyed once they know you’re not receiving regular money. So as much as possible, to reduce bad impression and increase the odds of application, list all sources of income you may have.
It’s easy to give up and lose hope once you’re in financial trouble. The anxiety often eats up your logic. There’s no need to panic. By knowing these options, you are now one step ahead into finding a relief towards better finances.