How to avail personal loan for unemployed loans in india?

Snneha Lukka August 23, 2019

Personal loans are generally available for people in need of short-term financial assistance. Most personal loans are offered on the basis of the requirements for salaried or self-employed people who have a steady source of income. However, that doesn’t mean that you can’t ever get a loan if you’re currently employed. It isn’t easy if you’re out of work and need to manage household expenses, especially if an emergency situation arises that you may not have the funds for. There are several types of loans that you could still apply for if when you don’t have any income flow. Let’s examine the personal loan for unemployed people.

Types of Unemployed Loans India

1. Secured Loan: One of the types of unemployed loans you can apply for is a secured loan. This is a common type of personal loan that requires the borrower to provide collateral against their loan amount, so as to reduce default risk for the lender and provide a low interest rate for the borrower. If you are currently unemployed, this is one of the best options for you as it allows you to gain the financial assistance you need without requiring an income source. 2. Gold Loan: This is another common type of personal loan for unemployed individuals as it is relatively quick and simple. In gold loan, you will need to provide your personal gold as collateral. Visit your nearest bank branch to apply for a loan. The bank will require basic documentation for KYC purposes and you will be able to get a low interest rate.

3. Unsecured Loan: For unemployed individuals who have an excellent credit history, you may be eligible for an unsecured personal loan. With this loan, there is no need to provide collateral against the amount you borrow. However, the loan amount that is approved will depend on your personal profile and past credit repayment history. Unsecured loans have a slightly higher interest rate than that of secured loans and gold loans, as there is no collateral required by the lender. 4. Loan against fixed deposit: If you have a fixed deposit in a bank, the same bank or even a different lender may consider providing a personal loan for unemployed people against the FD. Essentially, this is a secured loan, and you will most likely get 75-80% of the entire FD amount. 5. Peer-to-Peer lending: Another easy way to get personal loan for unemployed people is from peer-to-peer or P2P lending companies. These companies offer loans from individuals who can decide to undertake the risk of loaning to the borrower. 6. Loan against life insurance policy: If you need urgent cash loans for unemployed in India, you can take out a loan against your life insurance policy. However, the loan is only sanctioned once the policy is transferred to the name of the lender.

Government Loan Schemes for Unemployed Individuals

There are other options for unemployed people to avail loans via schemes by the Central and State Government. Prime Minister Rozgar Yojana In this scheme, loans are available to unemployed people to start their own business enterprise. It is eligible for individuals ages 18 to 35 who have an education at least up till Class 8. The maximum loan that can be availed under this scheme is Rs. 5 lakhs. Pradhan Mantri Mudra Yojana for Women This Government scheme is aimed to elevate the status of women by providing access to funds and encourage them to start their own business. Many lenders offer Mudra loans to female applicants. Agriculture Loan These loans are available to unemployed individuals who are engaged in the agriculture industry. Agriculture loans are available to individuals ages 22 and above. New Entrepreneur and Enterprise Development Scheme This scheme has been launched by the government of Tamil Nadu. The government provides a 25% subsidy on loans, and it is aimed for unemployed graduate youths ages 18 and above. However, this is a secured loan for which collateral is required.

How to Get Personal Loan for Unemployed People

1. Good credit score: Even if you’re unemployed but have a credit score of at least 750 or higher, it proves to the lender that you have borrowed money in the past and are a creditworthy borrower. 2. Good repayment history: Having a positive credit history is highly advantageous as this reassures the lender that you have a low risk of defaulting on loan repayments. 3. Existing relationship with lender: If you have an existing customer relationship with a bank or lender that you’re borrowing from and have maintained a positive relationship with them, you can get a good chance of obtaining a loan from them. This is why building long-term relationships comes in use! 4. Providing a guarantor: Applying for a personal loan with a guarantor who has a stable job and excellent credit score can help with getting your unemployed personal loan. A guarantor is an individual who agrees to repay the loan if you are unable to repay it yourself. 5. Possible future employment: Sometimes, if you are able to provide evidence that you will be employed in the future, you may have a chance of getting your personal loan without employment. This is especially true if you can furnish your offer letters from reputed, stable companies to show the bank or lender that you will be able to repay your loan with a steady source of income from your employment.

Benefits of Secured Unemployed Loans

1. Attractive interest rate 2. Flexible repayment tenures 3. Quick approval and disbursal 4. No collateral required 5. Tax-deductible interest 6. Minimal documentation 7. No co-signer required

Tips to Increase Approval for Unemployed Loans

Before you apply for a personal loan as an unemployed person, you should bear in mind that you’re likely to face a higher chance of rejection due to your unemployment. Having your loan rejected can reduce your credit score. However, there are a few ways to improve your chances of getting approved. 1. A credit score is like a report card of your credit history. When a lender sees a borrower has a high credit score, they feel more confident in your capability to repay the loan. Build your credit score by ensuring you borrow amounts you can comfortably repay and make your payments on time. 2. Opt for a secured loan, for which your collateral serves as a security for the lender. This loan has a better chance of approval when you don’t have any income source.

3. If possible, apply for your loan with a co-applicant. This helps to increase your approval chance, as the income of the co-applicant will be taken into consideration for the loan application. It will also give you a lower interest rate, better repayment tenure and higher loan amount. 4. A guarantor can also help boost your chances of getting a loan. Third-party guarantors reassure the lender that the money can be repaid in case you default on the loan. 5. Ensure that you improve your credit score by making the repayments well on time and to get better loan terms in the future.

If you’re unemployed and urgently need a loan, try to speak to your existing bank, especially a bank with which have a salary account. If you previously earned a high and stable salary, you may have a good chance of getting approved from that bank. In case this doesn’t work, you can try the other options mentioned earlier. Keep the tips above in mind, and you will have a much better chance at getting an unemployed loan.

Snneha Lukka

August 23, 2019

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