Personal Loans for the Unemployed

There are some personal loans that the unemployed can avail. Some of the important features of them are:

• Security or Collateral Assets like fixed deposits, gold, mutual funds, shares, or money-back policies are valuable and can be pledged to get a personal loan at any time.
• Other Income When you are unemployed or not drawing a fixed salary, then some other income in the form of rent, royalty and dividends/interest income may be a good way to get a personal loan.
• Good Credit Score When you do not have a fixed income, a high credit score becomes essential for a lender to lend you a personal loan.
• Existing Relationship with the Lender Relation with your existing lender matters a lot if you are looking for a loan and you are unemployed. Your existing relationship could give the lender confidence to lend you a loan.
• Short-Term Loans Only short-term loans may be available for the unemployed as the risk is higher in lending

Personal loans are some of the best options available. Others options of loans for unemployed include -

Loan Against Fixed Deposit: Fixed deposit is popular as it is risk-free and easy to invest in. Your FD can be put to good use in times of difficulty.

You can get a loan against your FD of up to 75-90% of the value without even breaking the same. The investment will continue to grow and at the same time, you can get a loan. The interest charged is 1-2% higher than the FD rate. But keep in mind you will not be able to liquidate the FD before closing the loan.

Gold Loan Availing a loan against the safety of gold is a great way to put this asset to use. If you are facing difficulty in getting a loan due to your unemployment situation, then a gold loan may be a good bet. Moreover, there is no credit score requirement for availing a gold loan.

Loan Against Rent Receivables If you have a property (commercial or residential) which is given on rent, you can avail a loan against the rent that you will receive in future.

To get a loan against rent receivables, you would need to get into a tripartite agreement between the lender, your tenant and yourself. The future rental for your property is paid directly by your tenant to the lender till the loan is closed.

Loan Against Investments You may have investments in mutual funds, shares or even money-back insurance policies. All these investments can be used to get a loan.

The interest rate on these investments is usually lesser than the interest rate on usual personal loans due to the safety of these investments.

The only thing that you should keep in mind is that you would not be able to sell any of these investments before you close your loan. And if you are not able to clear your loan, your investments would be sold to realise the loan amount

Loan Against Property If you are looking for a big amount as a loan, you might want to try getting a loan against a property. However, this is a long-term loan, so it might be difficult for an unemployed individual to get this loan.

Also, if you are facing financial problems due to COVID and do not have any of the assets above to get a secured personal loan, then you could use loans or advance from your EPF account or even take a withdrawal from your PPF account. You could also use many of the measures announced by your state or central government.