How to Get Approved for a Loan Without Proof of Income
You lost your job a few months ago. You’re struggling to keep up with your bills. You need a personal loan to help you stay afloat. But you’re concerned about the lack of income. You start searching for online loans and begin applying.
However, the lenders reject your application due to the income gap from the past few months. You search for other lenders, but they also look at your income gap as a negative.
It may seem that all lenders require income documentation. Everyone is telling you that getting a loan without proof of income is impossible but that’s not true. Getting a loan without proof of income is possible. If you don’t have a full-time job, there are lenders who can approve you for a loan with no job or income documentation.
A personal loan allows you can borrow money for whatever reason but you may still have to prove that you have the ability to make repayments. You can’t deny the fact that true that a consistent source of income can help you easily qualify for a loan, but it’s also true that there are certainly other ways you can prove your ability to pay. All you may need to show is alternative income sources to replace traditional income.
This article will show you how to get a loan without proof of income. Let’s explore.
What Qualifies as Alternative Income?
Alternative income is income other than the traditional income sources, such as W2 income. Perhaps you’re an independent contractor who receives sporadic income.
Record any income you receive on your loan application. Some lenders will accept any income source, no matter how unstable it may be.
You can note other income sources, such as:
- Disability income
- Unemployment benefits
- Housing benefits
- VA benefits
- Retirement benefits
- Trust funds
You can also record income sources from a spouse or significant other. When assessing an applicant, lenders want to see any income source or pool of funds that will allow you to pay back the loan.
What if I Don’t Have Alternative Income?
If you don’t have other income sources, you can find a co-signer. A co-signer is someone who applies for the loan with you. A family member, friend, or relative can be a co-signer.
Lenders may approve your loan if someone can help you repay it. With that, the lender will hold your co-signer responsible for the loan if you cannot pay it back. If you think you’ll gain employment in the short-term, however, having a co-signer is a good option.
If a co-signer isn’t an option, you can apply for a collateral loan. Collateral includes valuables that you can pledge in case you default on the loan. You could pledge the following as collateral:
Many lenders will accept collateral instead of traditional income. However, you must own the possession outright in most cases.
Is Getting a Loan without Proof of Income Dangerous?
Getting a loan with no proof of income isn’t inherently dangerous, but you must be careful. Even though lenders may approve your application, they might still view you as a high-risk borrower. If you don’t have proof of income but have a history of repaying your debts on time in the past, your credit report can vouch for you being a good borrower.
Some lenders could impose higher interest rates and shorten the life of the loan, forcing you to make higher payments in a shorter timespan. Lenders may also require automatic payments as an assurance. To avoid loan default, conduct a budget and see if you could pay back the loan realistically.
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