When times get tough, and you are low on funds, you may start to consider if applying for a personal loan is a good idea. Sure, the idea of getting funds immediately to help you during this time of hardship may sound good at the moment, but is it really worth it?
This may be a great solution if you can repay the personal loan promptly, but what if you have no income? Fortunately for you, there is a chance that you can obtain a personal loan without income proof.
Do you want to learn more about how you can get a loan without income proof? If you do, then this article was specifically curated for you. This personal loan guide will learn more about getting a personal loan without income and who you can contact for more information.
Things to Consider Before Getting a Loan
If you have no income proof and you need to apply for a loan, there are a few things that you will need to consider. Taking out a personal loan can have long-term and short-term consequences that you need to familiarize yourself with.
Can You Make Payments on Time?
Before you take out a personal loan without income proof, you need to ask yourself if you can make your payments on time. Late payments can negatively impact your credit score.
You also may incur late fees that you will also need to pay back. If you cannot pay your personal loan back, your lender may send your debt to collections and possibly sue you.
Do You Understand the Terms?
Even if you did receive an easy loan without income proof, don’t be so quick to sign the documents. Make sure that you read over the fees, repayment terms, interest rate, and penalties.
Do You Understand the Risks?
Make sure that you consider if the personal loan is even a good option for you. Ask yourself what you will do if you can’t make your payments on time.
There is a chance that you may lose your home or your car if you cannot make your payments on time. As stated earlier, you will need to review your interest rate and consider if it is worth taking the risk.
What Counts as Income?
Even if you are unemployed, you may have other streams of income coming in. This can include any disability payments, interest, and dividends, or alimony. When you apply for a personal loan, even if you are unemployed, a lender may request to see proof of some type of income.
Personal Loan Without Income Proof
If you are looking for some type of financial relief while unemployed, you will want to be wary of any predatory lenders. Even if you need a personal loan, make sure that you do not overlook any severe risks that can harm you.
For example, some predatory lenders impose almost impossible repayment terms on their clients. These lenders can impose these terms because their loans do not have regulations like other traditional loans.
Predatory loans may be through payday loans. Not every payday loan has unrealistic terms, but it is crucial that you review everything before signing to receive your funds.
Secured vs. Unsecured Loans
There are two main types of personal loans that you can get: secure or unsecured. Secured loans are loans that are backed by an asset such as your home or a car.
Unsecured loans do not require collateral. You receive unsecured loans based on your credit score because lenders take a considerable risk when offering unsecured loans.
As mentioned earlier, payday loans can be predatory if you do not read the terms and conditions. These loans are short-term and almost always have astronomical interest rates.
The repayment structure and terms vary by the lender, the amount that you wish to borrow, and the state you live in. It is essential to look into these payday loans before you sign anything. Payday loans are not legal in certain states.
If you have a credit card, you may be able to borrow a portion of your limit. Cash advances are also short-term and can have high-interest rates.
There may be other additional fees when you take cash from your credit card at an ATM. It is important to know that the high-interest rates on a cash advance are usually higher than credit card purchases.
Debt Consolidation Loans
If you struggle to keep up with all of your bills, you may want to combine these debts into one payment. When you combine all of your debt into one payment, you consolidate your loan, making it easier to pay down your debts all at once instead of each of them individually.
Some debt consolidation companies may require you to put up real property as collateral. Make sure that you read all of your terms and conditions before you accept any loans.
If you need to put up your car or your house for collateral, make sure that you make your payments on time. If you do not, the company will take your property from you.
What if I Don’t Qualify?
If you do not qualify for a loan, there are still other ways to plan financially. You first may want to evaluate your bills and take those steps to reduce your expenses.
If you cannot make payments on time for any bills, loans, or credit cards, you may want to work with your creditors directly.
Your lenders are more willing to help you work through your financial hardship so long as you keep in contact with them. They may be able to point you in the direction of someone who can offer you financial assistance during your hardship.
Review Your Savings
If you have money stowed away in an emergency fund or a savings account, you may want to use it now. If you’re thinking about tapping into any retirement accounts, make sure that you review your terms before pulling any funds.
Review Other Income Sources
Many different online businesses will pay you to complete their surveys or to participate in user testing. Some companies need people to proofread content or write blogs for their businesses.
If you find any of these opportunities online, make sure that you research before accepting any payment. There are a few surveys and links that are scams.
Make sure that you do not pay any money in exchange for more work. It is a scam if someone offers to pay you with a check and advises you to cash that check and use the money to buy gift cards.
Look For Additional Aid
There are some local churches and organizations that may be able to offer you financial hardship.
If you need help with getting food, make sure to reach out to your government assistance website for food benefits. If you immediately need food, there are local food banks near you that you can also reach out to.
What Is a Home Equity Loan?
As an absolute last resort, you have the option to take out a home equity loan on your home. Home equity is the value of your house minus the amount of money that you owe on your mortgage.
If you decide to go through with a home equity loan, you will need to appraise your home. Home equity lenders want to see the current appraised value of your home to best determine how much they can lend you.
They also want to appraise your home to protect their interest. In the event that you default on your equity loan, the lender will take over your home to recoup their loss.
How Do Home Equity Loans Work?
Let’s say that you had your home appraised, and the value of your home is around $400,000. If you only owe $200,000 on your home loan, you should qualify for an equity loan of $200,000, right? Wrong!
Home equity lenders only let you borrow around 80% to 85% of the equity in your home. Once you figure out what 80% or 85% of your home appraised value is, you will then deduct how much you owe on your loan.
For example, let’s say you have a lender who approves you for 80% for the home equity loan. 80% of $400,000 is $320,000.
When you deduct $200,000 from $320,000, you get $120,000. This means that you may receive up to $120,000 for your home equity loan.
If you receive an approval, the lender will provide you with a lump sum of money. Although this sounds like a fantastic resource, it may not be ideal for most people because of the repayments.
If you have a fixed-rate loan, you will need to pay back the money over a set number of years set out by your lender. You will have to pay the principal and the interest on your loan each month.
Home Equity Loan Requirements
There are a few standard requirements across most home equity lenders, but keep in mind that each lender also has its own set of requirements. For example, you will need to ensure that you have at least 15% to 20% of the equity in your home before you apply for a loan.
Credit Score Requirements
Most home equity loan lenders prefer their applicants to have a credit score of 620 or higher. If your score is lower than that, you may not qualify for a loan. If you do qualify, you may have higher interest rates than most other applicants.
Debt to Income Ratio
Before you apply for a home equity loan, make sure to review your debt to income ratio. Most lenders prefer for you to have a 43% debt to income ratio.
It is even better if your ratio is much lower. You can calculate your debt to income ratio by dividing your monthly debts by your gross income amount.
The Documentation You Will Need
Once you meet the requirements of a home equity lender, you will need to prepare your personal documents. Make sure that you have a copy of your real estate purchase agreement. This agreement should list the type of property you own, the address of your home, the date of sale, and the purchase price.
Other necessary documentation you will need:
- Letter of employment (if employed)
- Social security number
- Marriage certificate (if married)
- Past two years of W2 forms
- Proof of homeowner’s insurance
- Proof of flood insurance (if applicable)
- Paperwork on outstanding debts
If you have all of these documentations ready and on hand, ensure that you provide them to your home equity lender.
They may require additional paperwork that is not listed here. Ensure that you reach out to your lender to ensure that you have all the paperwork you need to ensure that your loan processes smoothly.
Can I Sell My Home Instead?
If you do not qualify for a personal loan or a home equity loan, you also have the option to sell your home. You can either reach out to your real estate agent to help prepare you to put your home on the market, or you can sell your house to an iBuyer.
Cash offers on your home? You’re in the right place!
An iBuyer is a company that uses powerful technology to create an all-cash offer on your home. If you choose to sell to an iBuyer, they will take care of owning, marketing, and selling the house on your behalf. Many people prefer to sell to an iBuyer because it gives them more control over how fast or slow they close on their homes.
Personal Loan Alternative Help
There are several different types of personal loans that you can apply for, depending on your current situation. If you have positive equity in your home, you may be able to qualify for a home equity loan.
You also have the option to apply for personal loans through your bank or through loan companies that accept bad credit and minimal income. If you cannot get a personal loan without income proof, you can also consider selling your home.
If you find that selling your home is the best choice for you and your family, reach out to us now. We are available to answer any questions or concerns you have about the iBuyer process.