What are No Income Loans? Here’s How to Get One—Even Without Income

No Income Loans Can Allow You to Get the Financing You Need

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At some point, there’s a good chance you’ll be in a pinch for money and want to take out a loan. But what if you need the money because you don’t currently have a traditional job? This is where no income loans can help.

When your financial situation leaves you little choice but to get a personal loan, and you’re struggling to prove your income, it’s still possible to move forward. Here’s what you need to know.

What Are No Income Loans?

It’s true that most lenders require that you provide some proof of income before they’ll let you borrow money. However, no income loans are products that some lenders may offer if you have an alternative way to prove that you can repay the debt.

For the most part, what lenders really need is an indication that you’ll actually be able to repay the loan on schedule. 

If you have good credit and a relatively low amount of debt right now, there’s a chance that you might be able to get a loan, even if you aren’t currently traditionally employed.

How to Qualify for a No Income Loan

Getting a personal loan mainly depends on proving that you have a way to fulfill your obligation, and no income loans require that you have some alternative way of showing this ability. In addition to showing your credit history demonstrating that you have been paying on time, here are some other ways that you can indicate your ability to make payments.

Alternative Income Sources

You might not be able to show current traditional employment, but you could have other sources of income available to you. Some of these alternative sources might include:

  • Retirement account (including a pension)
  • Child support
  • Alimony
  • Unemployment benefits
  • Social Security benefits (retirement or disability)
  • Veterans Administration (VA) benefits
  • Side gig or business startup
  • Royalty payments
  • Tip income
  • Partner income
  • Dividend payments or other investment income

Another possibility is that you have accepted a job offer but you haven’t started yet. Get an offer letter from your future employer, and a lender might be willing to provide a loan based on your future income—and even delay your repayment start date until after you get your first paycheck.

Using Collateral

Rather than getting an unsecured personal loan, you might be able to get a no income loan if you secure it with something valuable. If you own something like a car, valuable antiques or even have a bank account or CD, lenders might be willing to consider those as collateral for no income loans.

Realize, though, that if you don’t meet your obligation, the lender then has the right to repossess your property to help pay off your debt. So if you offer your car as collateral on a loan, missing payments could mean the loss of your car. You might not be able to afford such a loss.

Set Up Automatic Payments

Prove you have a bank account and agree to set up automatic loan payments, and you might be able to get a no income loan. This is especially true if you can show your bank account has a significant amount of money in it—even if you aren’t currently employed. With automatic payments, the lender has access to your bank account and can get repaid without your active participation each month.

Get a Cosigner

A cosigner is someone, often a family member, who agrees to be equally responsible for your debt. If you know someone who has good credit and a steady income and is willing to put his or her finances on the line for you, this can be a solution. The lender might agree to provide you the funds, knowing it can go after your cosigner for payment if you don’t come through. 

Be aware, though, that if you leave your cosigner responsible for missed payments or even the whole loan, it could ruin a relationship and damage the cosigner’s credit. 

It’s usually best to reserve this option for times when you’re sure you can make the payments with money you know is coming.

Even if a lender thinks that you’re likely to repay your loan, it still might question your ability to come through. As a result, you might have to pay extra to make up for the risk lenders are taking on you. Some of the disadvantages of getting a no income loan include:

  • High-interest rates: You’ll probably pay much higher interest rates when you get a no income loan. Some fast-money loans on the internet carry rates above 300% annual percentage rate (APR)—in line with payday loans.
  • Smaller amounts: In many cases, you won’t be eligible for higher loan amounts, even if you have a cosigner. Lenders might not be willing to risk a lot of money without proof of income.
  • Shorter loan term lengths: Often, no income loans have repayment terms that reflect months, rather than the years you might get to pay off other kinds of loans. On top of that, payments are often due weekly, rather than monthly.
  • Larger fees: You’re likely going to pay an origination fee with any personal loan, but the fees might be even bigger when you get a risky loan. 

Before you get a no-interest loan, it’s important to understand that you will pay extra as a result of the increased risk to a lender. They’ll do their best to make sure you’re on the hook for more frequent payments, at a higher rate, to ensure they get as much money as possible in a short period of time.

Alternatives to No Income Loans

If you don’t want to deal with the downsides associated with no income loans, there are other possibilities. Before you resort to a no income loan, consider some of these other options:

  • Ask a family member or friend for a loan: Instead of going to the bank, see if a loved one can help you out. You’ll get better terms. Just make sure you repay the debt, or you could lose an important relationship.
  • Community resources: Check in your community to see if there are resources available to those in your circumstances. A food pantry, indigent utility fund, or church congregation might be able to help you cover your expenses in the short term without the need for a loan.
  • Get creative in how you make money: Consider becoming a rideshare driver. You can cash out every day, allowing you the chance to earn quick cash. Additionally, you could offer handyman services, pet sitting, or childcare services to earn extra money fast. Also, you can consider renting out a room in your home or selling unneeded items.
  • HELOC: If you have equity built up in your home, you might be able to get a home equity line of credit (HELOC). You can draw on this money as needed, and pay it back later.

Carefully consider your resources and all options before you decide on a no income loan.

It’s never easy to be in a situation where you need the money and have no income. While you can turn to debt to cover your emergency, look at other possibilities as well. If you prepare ahead of time, you might be able to rely on an emergency fund. Additionally, if you lose your job, immediately apply for unemployment benefits. There’s nothing wrong with getting help temporarily in that way.

Review all of your financial resources and make use of them before seeking a personal loan while you look for a new source of income.

Article Sources

  1. Fannie Mae. "B3-3.5-01: Income and Employment Documentation for DU (08/07/2019)," Accessed March 19, 2020.

  2. Consumer Financial Protection Bureau. "What is a Co-signer?," Accessed March 19, 2020.