How To Get A Personal Loan Without Income Verification
A lot goes into calculation before your lender approves your request for a loan. Lenders often reject applications if they doubt the borrower’s ability to pay the loan back in time. However, that doesn’t mean that you have no financing solutions. For those who don’t have a steady job or income, there are options.
There are various ways to obtain a personal loan that have less stringent criteria in terms of verifying income. Simply switch focus to the lending products that generally place little or no emphasis on income verification.
Secured Personal Loans
One of the best personal loans to apply for without income verification would be a secured loan.
With a secured personal loan, you pledge collateral to a lender. Collateral is an asset that is given as a security to the lender to protect their loan repayment. In case you are unable to pay your installments, the lender has an option of recovering their money by taking possession of your collateral and selling it.
For car loans, the car can be used as the collateral too. However, in the event installments are not paid, the lender may seize your car.
Another type of a secured loan is a mortgage loan and these days, you can also apply for an online mortgage. This loan is also borrowed against an asset, in this case a house or dwelling space.
Secured loans usually have a lower rate of interest. However, you may have to go through a set of application formalities, which makes secured loan applications a little lengthier. The much easier alternative is unsecured personal loans.
Unsecured Personal Loan
An unsecured loan doesn’t require any collateral and is often approved faster. Still, there is the catch when compared to secured loans. These loans carry a higher rate of interest. Since no collateral is involved, the lenders will be stringent about on-time repayment too. Accordingly, unsecured loans will likely feature higher interest rates and a shorter repayment cycle.
Payday loans are technically a subcategory of unsecured loans that are provided by a lot of lenders. A payday loan is a loan given on the condition that upon the next credit of your salary, you will pay the loan back. These are one of the easiest loans to secure and the millennial generations’ most preferred loans too. You could even apply for payday loans online.
Much like other unsecured loans, the interest rate on these loans is higher and their payback period is shorter. The payback period extends to a month at the most. Another catch is that you can only borrow a limited amount unlike conventional loans.
Line of Credit
Under this type of financing arrangement, you can borrow money up to a certain limit. The most common form of lines of credit is a credit card. So, if your credit cap is $1000, you can borrow up to $1000 on your card. Certain credit cards like credit builders and secured credit cards don’t require any income proof, and therefore, are easy to obtain.
In the case of credit builder credit cards, they allow you to borrow money on the basis of your credit score. A credit score is a technical term for the ‘creditworthiness’ of an individual. It is calculated on the basis of active accounts, the total amount of debt, and repayment history. The sooner you repay the borrowed amount on your credit card, the lesser interest you pay.
How to Get The Loan Approved?
To get a no income check loan approved, you may have to provide certain proofs for potential lenders to assess your creditworthiness. While approaching a lender, you should:
1. Take documents related to your finances
2. Collect any past income receipts or pay stubs, even if you are not earning at the moment.
3. If you have taken loans before, gather relevant documents and receipts as evidence for how you repaid the debt.
4. If you can, get a pay stub from your employer. A paystub can be used as a proof of income.
Remember, the bank or lender that you are going to approach will calculate your APR, or annual percentage rate of interest, based on your credit score, report, and repayment history.
You can leverage a good credit score to get your loan application accepted. The higher the credit score, the easier it is to get a loan. To improve your credit score, start by paying off any debts that you may have.
Here are a few ways to get out of debt quicker:
- Prioritize clearing the loans with a higher rate of interest first
- Pay even the smallest debts off quickly
- Start freelancing or consider a part-time job for extra income
- Stop using your credit card
- Stack your money in envelopes and apply these funds for dedicated purposes
- Refrain from making high-risk investments or ones with a long lockup period
- Stick to a budget
- Sell unused possessions on Facebook and Craigslist
- Look for better-paying jobs
When considering a no-income verification loan, weigh the pros and cons objectively. Ultimately, building your credit score will help you secure loans faster and with better terms, even if you don’t currently have an income to depend on or verify for lenders.