Loans For Unemployed People

Finding a lender willing to consider your application for a loan when you are unemployed could prove difficult, as your chances of approval will be based on several factors, including your credit history, and, crucially, your income.

Can I get a loan if I’m unemployed?

Being unemployed doesn’t necessarily mean that you won’t be able to get a loan, although you’ll need to prove that you have another form of guaranteed income.
When considering your application, lenders like to see a predictable source of income; this demonstrates that you’re likely to be able to afford your monthly repayments.

The lender will look at how much money you have coming in against your regular outgoings. The decision to approve your application or not will be based on your credit score, credit history, and how affordable any loan would be for you.

Can I get a loan if I have no income at all?

If you have no income at all, it’s very unlikely that you’ll be approved for a loan.

Do benefits count as income when applying for a loan?

Some lenders may consider applications from people on certain benefits. For further information, you may wish to read our guide on loans for people on benefits.

Can I get a payday loan with no income?

If you do not have an income, you’re unlikely to be accepted for credit.

In line with important rules put in place by the Financial Conduct Authority (FCA), authorised and regulated lenders are required to carry out a creditworthiness assessment on anyone applying for credit, regardless of the type of loan you choose.

With this in mind, you’ll need to undergo the same checks when applying for a payday loan as you would a short-term loan.

What are my chances of approval for a loan if I am unemployed?

A very small number of specialist lenders on the Little Loans panel could be willing to work with people who are not employed but have another source of income, such as certain benefits. Our free eligibility checker allows you to see how likely you are to be approved for a loan before you apply.

Will applying for a loan affect my credit score?

Little Loans is a credit broker, and we use soft search technology to check your eligibility for a loan. A soft search will not damage your credit score and will only be visible on your credit file to you and the company who carried out the search.

If you’re matched with a loan and decide to make a full application, the lender will carry out a creditworthiness assessment in line with FCA guidelines. A creditworthiness assessment will include either a hard search or Open Banking.
It’s important to be aware that a hard search will be visible on your credit file for up to 12 months. Multiple hard searches within a short period of time will cause your credit score to decline.
To find out more, please visit our guides to hard and soft credit checks.

What’s Open Banking?

Open Banking is a safe and secure procedure used by a number of lenders, including several of those on the Little Loans panel.
Rather than using only your credit score to help with their lending decision, Open Banking provides an authorised third-party, such as a lender, with a read-only insight into your recent financial activity via your online bank account.
Only you can decide who has access to your account and you can withdraw your consent at any time.

Can I get a loan if I’m unemployed and have bad credit history?

Having a bad credit score could make it harder to find a loan, especially if you’re also unemployed. Some lenders, including a handful of those on the Little Loans panel, could be prepared to work with people who have a less than perfect credit record. As always though, your chances of being considered for a bad credit loan will depend on various factors, including your affordability.
A bad credit loan could come with a higher rate of interest.

Do I need a guarantor?

Some lenders offer specialist loans where a guarantor agrees to make the repayments if you cannot. Having a guarantor may not be necessary, but it could be an option in some circumstances.
It’s very important that your guarantor knows what they are agreeing to. Their financial situation and credit history will be considered carefully by the lender and, if you can’t manage your repayments, they will have to cover them for you.

Please be aware that none of the lenders on the Little Loans panel currently offer guarantor loans.

I’d like to search for a loan; how much money could I borrow?

Little Loans could help you search for a loan between £100 and £10,000. How much you could borrow depends on your own personal circumstances.
It’s important to only borrow money that you need and can afford to pay back. Making a late repayment or missing one altogether will have serious financial implications and will negatively impact your credit score.

What sort of repayment terms are available for a loan?

Little Loans makes it possible to search for a loan with a repayment term between 3 and 60 months, subject to the amount of money you apply to borrow.

How can I search for a loan with Little Loans?

Before you search for a loan, you’ll need to make sure that you meet the eligibility criteria.
You must:

• Be over the age of 18;
• Be a UK resident;
• Have a UK bank account and valid debit card; and
• Have a regular source of income paid into your bank account.

As discussed, a regular source of income could include some types of benefits, although this will depend entirely on the lender.

Careful consideration is needed before you search for a loan, and you’ll need to be sure that you can afford to make your repayments on time each month. If, after thorough research, you feel that a loan could be a suitable option for you, you’re welcome to use Little Loans to help you search.

Here’s what you can expect from the Little Loans journey.

1. Fill out our online form. You’ll need to let us know how much money you need to borrow, and for how long. This stage should take no longer than five minutes.

2. We’ll run a soft search and scan our panel of lenders for a suitable loan.

3. If we’ve matched you with a lender, you’ll be redirected to their website, where you can find out more about the loan.

4. If you’d like to make a full application, the lender will carry out a creditworthiness assessment, which will include either a hard search or Open Banking. Remember, a hard search will remain on your credit file for up to 12 months, and undergoing multiple hard searches within a short period of time could damage your credit score.

5. If the lender is happy with the outcome of their checks, they will let you know when your money will be sent.

Good to know: your lender will send you a loan agreement, which will include the terms and conditions of your loan offer. You should set some time aside to read through this carefully before deciding whether to sign and return.

Alternatives to a loan

There may be other options available to you if you’ve decided that a personal loan isn’t quite right at this stage.
Firstly, you should make sure that you’re receiving all the benefits you’re entitled to. You can check this by using the free Turn2Us Benefits Calculator.

If you’ve been in receipt of certain benefits for at least six months, you may be able to apply for a Budgeting Loan. A Budgeting Loan could help you cover the cost of essential expenses, such as clothes, footwear, advanced rent, and maternity or funeral costs.
Repayments will be taken from your benefits.
You can find out more about Budgeting Loans and check your eligibility here.

If you claim Universal Credit, you might be able to get a budgeting advance. A budgeting advance could be paid to you if you’re facing financial hardship. The advance will be repaid through your Universal Credit payments.

If you need money for food or energy urgently, please visit StepChange.

I can’t repay my loan - what do I do?

A late or missed repayment will harm your credit score. If you find yourself in a position where you’re suddenly unable to make your loan repayments, you should contact your lender at the earliest opportunity. Your lender will understand that financial situations can change at any time, often for reasons beyond our control. They will work with you to put a plan in place to help you through this challenging time.

In the event that you feel your debt has reached unmanageable levels, or if you are unable to keep to your financial commitments, the organisations listed below could help by providing you with free and impartial advice:

• StepChange
• MoneyHelper
• Citizens Advice
• National Debtline