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A strong economy is scant consolation if you find yourself struggling with unemployment. Millions of Americans are out of a job right now and are contending with having enough money to live on. Some turn to loans to get them over the rough patches, but what do you do if you are unemployed and have bad credit? Believe it or not, you do have options, and we’ll explore loans for the unemployed with bad credit.

Before you apply for a loan, consider whether you’ve exhausted your other options. These include collecting unemployment insurance, welfare benefits, and help from family and friends. If you decide you need a loan, you’ll have a menu of choices, such as personal loans, cash advances, and lines of credit. We’ll show you the best online personal loans available right now if you’re unemployed and your credit is bad, plus we’ll discuss alternative types of loans.

  • Credit Card Cash Advance: If you own a credit card, you likely have the ability to get a cash advance up to a set limit. Beware that interest accrues from day one, as well as cash advance fees that can mount up fast. Some cards specialize in offering low-fees for cash advances.
  • Peer-to-Peer Loan: These are similar to unsecured personal loans, except that the lender can be any individual or institution that accepts your application on an online marketplace. In 2017, CardRates.com named LendingClub the top P2P platform.
  • Loan from Family of Friend: If available, these might be the easiest to obtain, but keep in mind possible drawbacks. Even if you don’t have to pay interest, you risk alienating someone close to you if you fail to repay the loan. Also, some folks just don’t want to share their financial circumstances with their close ones.
  • Car Title Loan: You can use your car to secure a title loan as long as you have sufficient equity in the vehicle. These loans are costly and you risk losing your car if you default on the loan.
  • Home Equity Line of Credit (HELOC): This is a revolving loan account backed by the equity you have in your home. It usually charges a reasonable APR, but, of course, is only available to homeowners.
  • Refinancing Loan: If you have equity in your home or car, you may be able to arrange refinancing that allows you to cash out some of your equity.
  • Pawn Shop Loan: Pawn shops charge high fees and interest rates to advance you from 25% to 60% of the pawned object’s resale value. Best avoided if possible.

How Can I Get a Loan without Proof of Income?

The loan matching services we review here all indicate you must provide some proof of income to get a loan. This could be a pay stub, a series of canceled benefit checks, or proof of regular annuity or pension income. If you can’t provide any proof of income, you’ll have to look to an alternative lending source.

Typically, secured loans do not require you to provide proof of income. That’s because you have to put up collateral to obtain a secured loan.

The lender knows it can seize the collateral and sell it if you default on your loan. That makes secured loans much less risky, which may entitle you to a lower APR and fees. The downside is you will lose your property if you default on your loan.

The usual forms of collateral that lenders routinely accept include your home, car, cash, and securities. For cars and homes, you can only borrow to the extent that you have equity in the property.

Equity is the value of the property that exceeds any existing loan balance on it. A HELOC is a popular way of unlocking equity in your home. A car title loan lets you cash out your equity in your vehicle, but typically has higher rates and fees than a HELOC.

If you have a savings or brokerage account, you may be able to pledge the account as collateral for a personal loan. You won’t be able to withdraw the collateral until you repay the loan. These too have favorable interest rates and lower fees.

Can I Get a Loan if I Just Started a New Job?

A job, new or not, is helpful for getting a loan. If you have a new job that ended a period of unemployment, you may have to document your salary. You can usually do this by sharing a copy of your employment acceptance letter with the lender. A few pay stubs should also suffice.

Proof of employment is especially important if you have a bad credit score. But you can look upon the loan as a golden opportunity to improve your score.

To help boost your credit score, you must use a lender that shares your payment activity with at least one of the three major credit bureaus: ExperianTransUnion, and Equifax, and preferably with all three. All four lending networks reviewed in this article indicate they report your activity to at least one of the credit bureaus.

You want those reports to be positive, which means you always pay on time and always pay at least the minimum due. It could accrue to your benefit if you pay off your loan faster than required.

When you start a new job, the credit bureaus update your credit report to indicate the employer, the start date, and your salary. These facts alone may help increase your credit score. But the most important factor is to use the job to establish your creditworthiness by paying your bills on time.

Landlords are more willing to rent to gainfully employed individuals, and loans are more forthcoming. Whenever you take a new job, spend the time to review your three credit reports verifying the job shows up correctly, including salary.