Can you get approved for a loan with no employment?

Finance

In many cases, you cannot get a loan if you are not employed, since this is a vital thing that lenders look for in order to recover the money they lend out. 

However, there are different circumstances that lenders might consider, especially for those who are retired, freelancers or in between jobs.

According to recent statistics from the U.S. Bureau of Labor Statistics, as of December 2023, the unemployment rate is around 3.9%, but there are a number of people in between jobs or working in the gig economy who may still be eligible for a loan.

In this article, we explore the possibilities and challenges of obtaining a loan without a conventional job.

Understanding the Basics of Loan Approval

Traditional lenders such as those offering personal loans or credit cards typically evaluate an applicant’s credit score, income stability, debt-to-income ratio and employment history to determine their eligibility. 

Employment serves as a key indicator of an individual’s ability to repay a loan, providing lenders with assurance regarding financial stability.

Without employment or a stable income, people may have to resort to unpleasant forms of borrowing, such as those from loan sharks or predatory lenders, selling valuable items they own through pawnbrokers or other specific loans for bad credit, which often carry high interest rates.

Do Lenders Consider Alternative Income Sources?

Yes, while conventional employment may not be a prerequisite for loan approval, alternative income sources can bolster your chances of securing financing. 

Freelancers, gig workers and independent contractors often generate income through diverse channels, such as freelance projects, rental properties, investments or royalties. 

When applying for a loan, highlighting these sources of income can demonstrate your capacity to meet repayment obligations, thereby enhancing your eligibility.

Can I Use My Assets as Collateral?

In the absence of regular employment, offering collateral can mitigate the risk for lenders and increase the likelihood of loan approval. 

Collateral typically includes valuable assets such as real estate, car (see auto loans) or savings accounts, which serve as security against the borrowed amount. 

By pledging collateral, applicants provide lenders with recourse in the event of default, thereby offsetting the perceived risk associated with non-traditional employment situations.

How To Build a Stronger Credit Profile

A robust credit history can significantly influence loan approval decisions, irrespective of employment status. 

Timely payments, low credit utilization and a diversified credit mix reflect responsible financial behavior, instilling confidence in lenders regarding your repayment capacity. 

Prioritize maintaining a healthy credit score by managing existing debts judiciously, monitoring your credit report for inaccuracies, and avoiding excessive credit inquiries.

Can I Use Co-Signers or Guarantors?

In situations where securing a loan independently proves challenging, getting the support of a co-signer or guarantor can strengthen your application. 

A co-signer, typically a family member or trusted friend, agrees to assume responsibility for loan repayment if the primary borrower defaults. Similarly, a guarantor provides a financial guarantee to the lender, offering reassurance regarding the borrower’s creditworthiness. 

By involving a co-signer or guarantor with stable employment and a strong credit history, applicants can enhance their credibility in the eyes of lenders, potentially leading to more favorable loan terms.

What Are The Specialist Loan Options Available?

In recognition of evolving employment trends and changing borrower demographics, financial institutions have introduced specialized loan products tailored to accommodate non-traditional employment arrangements. 

These include self-employed mortgages, personal loans for freelancers, and small business loans for entrepreneurs. 

Such offerings often feature flexible eligibility criteria and customized repayment terms designed to cater to the unique needs of self-employed individuals and unconventional borrowers.

While securing a loan without traditional employment presents challenges, it is not a total barrier to borrowing. By exploring some of the avenues in this article, individuals can enhance their prospects of loan approval. 

However, it’s essential to exercise caution and conduct thorough research to select reputable lenders and negotiate favorable terms. Ultimately, with careful planning and diligent financial management, individuals can navigate the loan application process successfully, even in the absence of conventional employment.

Continue Reading

Why Your Start Up Needs a Financial Advisor

Business

advisor
Photo by CC user Christophe Benoit on Flickr.
Photo by CC user Christophe Benoit on Flickr.

Starting your own business is an exciting time and one that will test your mettle, your knowledge and ultimately your acumen. Whilst there are many avenues of success that you can find yourself walking down with your business, the roads to success are often fraught with dangers where a series of bad decisions could see it all fall down.

The financial management of your company is key, this is where the staggering numbers of start ups that fail often find difficulties. Naturally your business will need to bring in money through the popularity of your products and services but without sound financial dealings, you could find yourself in difficulty regardless of how high your sales are. Hiring a financial advisor for your firm is a smart move to make for the security of your business and here’s just a few reasons why your start up needs one.

Investment in Your Future

Whilst hiring a great financial advisor, people like the effective Keith W Springer, will set you back some money, it is important that you look to this as an investment rather than a cost. A financial advisor can help you make financial mistakes that could cost you money in the long run and their advice will essentially pay for itself over time. Deciding what part of the business to outsource can be tough but a financial advisor is one area that should not even be questioned.

Free Up Your Time

Even if you yourself are financially savvy, your time is better spent on working out how the business can operate better, how you can achieve growth and ironing out creases that exist. If you are bogged down in the financial side of things then this inhibits you when it comes to doing what you should be doing, which is leading your company. A financial advisor will give you more time in your business, the value of time to spend on your business is immeasurable.

Staying up to Date

The world of finance, taxation and government legislation is always changing and as a business it is vital that you keep on top of what you are required to do from a legal standpoint. A financial advisor is paid to stay on top of such changes and offer you advice in order to adhere to them. For you to spend time keeping up to date on such things will only take you away from the day to day running of the business.

An Extra Pair of Ears

When it comes to making key decisions for your business it is important that you bounce the idea off many people to gain various perspectives. Having a financial advisor gives you the opportunity to seek advice from a financial standpoint and from somebody with no vested interest. Generally speaking, financial advisors are those who deal in figures alone, they weigh up risk through calculations and can offer advice without any emotional bias, the perfect way to help you make your decision.

Continue Reading

Top Tips to Make Your Money Go Further

Finance

Money rules all, and it always will, the main concern in almost everyone’s lives is having enough money, enough money to survive, enough money to buy what they want or enough money to achieve their dreams. Whatever your reason for being concerned with the size of your income or bank account I’m sure that you will echo these sentiments. So, how do we go about solving the issue of money worries, well, there are two approaches that you can take, making more of it and working hard to spend less of it, both of which can give you a more positive view of your finances and ultimately a happier life. Here are some tips for you as to how you can achieve this.

Couponing

Gone are the days where people would rake through magazines searching for a 50 cents-off promotion in the back pages or walking into the grocery store armed to the teeth with glossy pieces of paper to save them cash. These days the online world of couponing is a craze that is engaging everyone with internet access and it is a brilliant way for you to save money. The emergence of voucher and coupon websites has not only encouraged businesses to make more money by offering great deals for their prospective customers but has saved the general public tens of millions of dollars in purchases that they have made simply by downloading a coupon for free online, get involved and save some money.

Use Your Cash

There are several ways of using your money to make even more money, firstly you should be looking into what kind of account your bank offers you, if you have an APY of anything less than 0.2% the you should be looking to put your money elsewhere to let it grow. If you have large savings then consider investments into businesses, stocks or property to hopefully take some big profits from your investments. Money does breed money and the same goes for things like online gambling, if you take the risk then the rewards could be huge, you can start off risk-free as well with a bonus for online casino games that means that you won’t even be gambling with your own cash to start with, what better way to learn the trade than by using someone else’s money!

Sharing Economy

The values of a sharing economy can work wonders in your life and for your finances, the essence of this economic system is that people live within their means and open up opportunities for others to share parts of their lives. Whether this means that you decide to use a car pool to get to work or rent out your spare room, the idea of collaborative consumption is the perfect way to save more money in your life and something that you should be looking at trying out to aid your financial situation. By spending less and sharing more you can give your monthly finances a boost and give yourself the opportunity to meet more people and create a more sociable World, the perfect combination.

Continue Reading

Invest in Your Financial Future Today

Finance

What would happen going forward if you lost your ability to work for the remainder of your life?

Would you have the financial means with which to survive? Have you spent years building up your “rainy day” fund? What “fallback” solution do you have in place to get through tough financial times?

stock-exchange-911608_640

These are all questions that you should be able to answer, yet many people simply have no answers for such important matters in their lives. As a result, major financial dilemmas can creep up on them in a hurry, leaving some with nowhere to turn.

So, have you invested in your financial future?

Put the Funds in Motion

For starters, take the time now (not when you are in a pinch) to see where you stand financially.

Look at the following if you reside in North America to see what is most applicable to your financial needs:

  • Resources – What are your current and projected financial resources whether you live in the States or Canada? Will you be getting an inheritance of any sort down the road? Are you in a relationship where you are both working full-time or is it just your income that you two essentially rely on? About how many more years can you and/or your spouse expect to work? Have you taken advantage of a company-sponsored retirement plan? These are all topics that you should have an answer for in order to better secure your current and financial future;
  • IRA – Have you been setting aside money in a regular or Roth IRA? The two best-known of the IRAs available, the former is tax-deferred as you put money in it, with taxes being taken out when you start minimal withdrawal of money (you must begin taking funds out at age 70 ½). Meantime, there is no age when you must start taking money out of a Roth IRA; however that IRA is grown with after-tax dollars, so you do not get taxed when you begin pulling funds from it. Once you’ve reached the age of 59 ½, you are allowed to take out funds from the Roth IRA minus any penalties. Just like purchasing life insurance, having a retirement vehicle or two in place for not only your well-being but that of your family makes sense;
  • 401K’s – With a 401K, you can build up your investments through your employer. Unfortunately, too many employees miss out on the opportunity to participate in such workplace plans, plans that are even better when the employer matches a portion of the money the employee is investing (essentially this is free cash from your place of employment). If you are over the age of 50, you can put additional money in as you are essentially “catching up” in the race to fund your retirement. Another item to keep in mind is that you don’t necessarily have to be a full-time worker to become involved in a company 401K, so check with your company if they offer such opportunities in the event you work there part-time;
  • RESP’s – With a registered education savings plan (for Canadian residents) you can put away funds for a child’s education when they reach the post-secondary level. The money earned over time grows at a tax-deferred rate. It is important to keep in mind that the plan ends no later than when the individual it was taken out for turns 35.

Many Factors at Play

As you might imagine, there are many factors at play when it comes to determining your best financial scenarios.

The most important factor to remember is not making any rash decisions when it comes to your financial well-being.

Undoubtedly, changes will occur in both your professional and personal lives over time, so be able to adjust and plan accordingly.

That said starting sooner rather than later to plan for retirement no matter where you reside is a smart thing.

When you have a plan in place to manage your financial future (and take action if things go bad) is of the utmost importance.

Lastly, talk with family, friends and co-workers as to the choices they’ve made or will be making in their financial plans.

Getting feedback from them can be of great benefit to you as you invest in your financial future today.

Continue Reading