Getting a loan sanctioned involves fulfilling various conditions that have been laid down by the lender and meeting their eligibility criteria. When one takes a loan it has to be repaid back and the lender will like to ensure that the amount that they lend is safe. For this they want to check the repayment capacity of the borrower which would to a large extent be dependent on the income of the person taking the loan. The amount of loan that is sanctioned is also linked to a lot of factors and the monthly income is one of them. Does that mean that those who are not employed do not have access to credit in any form?
Can the Unemployed Get Credit?
For an unemployed person having access to credit can be a wee bit challenging as compared to those who are employed. However that does not mean that there are no options that can be explored for accessing some means of credit. Having said that it is important to remember that whenever you take borrow in any form you must be sure about how you will repay it as not paying on time or not paying at all can have severe consequences. Here we consider a few options to borrow without the borrower being employed:
- Secured Credit card: Credit cards are also provide access to credit; getting a credit card without regular employment status may be difficult but not impossible. Some banks offer the option of taking a secured credit card. These are cards that are issued against a deposit, the credit limit may vary from 70%-80% of the deposit value. The card functions like a normal credit card. Since it is against a deposit it can be issued without a credit rating also.
- Getting a Co-applicant on Board: If the person who requires a loan has been unemployed then the lenders may not be so willing to lend to him or her. Here is where the co-applicant may step in, the co-applicant will be the primary applicant and his or her income will be considered to sanction the loan. The rules may vary depending on the type of loan and do remember only specific relationships are allowed when people want to apply as co-applicants. Joint application may also help if the person seeking a loan has a low credit rating and finds it difficult to improve credit score due to lack of time or some other reason.
- Loan Against Some Assets: Another way to borrow without being employed is to borrow against an asset that is owned by the borrower. In such a scenario since the lender has an asset as collateral so they will be flexible in looking at the borrower meeting the eligibility criteria. Various lenders may be willing to lend against different assets. One has the option of borrowing against fixed deposits; take a loan against shares or gold and equity too. The rules, interest rates will depend on the lender policy and also the asset in question against which the loan is being sort.
- Peer to peer lending: Getting a personal loan without CIBIL score or proof of income may not be possible. This is where peer-to-peer (P2P) lending can help. This type of lending allows access to credit from channels other than the standard banking channels. There are P2P lending platforms where the lender and borrower both have to sign-up for the borrowing or the lending to take place. The lender in such a scenario will also make a few checks before agreeing to lend but here the process may be much more flexible thus allowing the borrower to take a loan even without a regular job. Depending on the various checks that are done the borrowers are assigned different categories depending on the risk perception associated with them. Based on this the interest rate on the loan is charged.
- Government Scheme for Unemployed: The Government of India also has some special schemes to allow access to credit to those who are unemployed on India. As per the scheme unemployed Indians who are educated till the eighth standard can take a loan up to Rs. 200,000 for events like marriage, medical requirements or home renovation. If the purpose is to start a business then they can borrow up to Rs. 500,000.
So if you are unemployed and want funds for some reason don’t lose heart there are options that you can explore and get funds for your use.