Availing a loan for unemployed individuals can be tough. Approval or rejection of personal loan applications mainly depends on your income. Personal loans are unsecured, and borrowers are required to meet certain eligibility requirements, the most important of which is the availability of a steady source of income. Since unemployed individuals do not have a steady source of income, their personal loan applications are often rejected.
However, there are certain kinds of loans even an unemployed individual can avail of when need be. Managing the household expenses is not easy if you are an unemployed person. An unexpected situation might appear that you may not have funds for. To cater to such financial emergencies, you can now avail of a loan. The following are the types of loans that can be availed by unemployed individuals.
Types of Unemployed loans in India
- Gold loan – Availing a gold loan is the most suitable choice if you are unemployed and in urgent need for loan. A gold loan is a common type of personal loan as it is relatively quick and simple. One needs to walk to their nearest bank branch to avail the same. To avail of a gold loan, one needs to provide their personal gold as collateral
- Secured loan – It is a personal loan in which an individual is required to provide the borrower with some sort of security against their loan amount. This reduces the risk for the lender who sanctions the loan. The loan amount will depend directly on the asset value and therefore, allows you to get financial assistance when you are unemployed
- Unsecured loan – An unsecured loan is issued to borrowers who have an excellent past credit repayment history and a good personal profile. High credit scores represent the borrower’s ability to pay back the debt. Unsecured loans are approved without providing collateral against the amount you borrow, hence there is a slightly higher rate of interest than that of gold and secured loan
- Loan against fixed deposit – An unemployed individual who has a fixed deposit in a bank can pledge their fixed deposit as collateral, in return for the loan amount. It is a secured loan and individuals get 75-80% of the entire fixed deposit amount
- Peer-to-Peer lending – Unemployed individuals can also avail of a personal loan from peer-to-peer lending companies. Borrowers can borrow money at a lower rate of interest and lenders can earn high returns. Peer-to-Peer lending companies offer loans from individuals who are ready to take on the risk of loaning to the borrower
- Loan against life insurance policy – Unemployed individuals can take a loan against their life insurance policy. When the policy is transferred to the name of the lender, the loan is sanctioned
Government loan schemes for unemployed individuals
- Prime Minister Rozgar Yojana – Individuals who have an education at least up till class 8 and are 18-35 years old are eligible for this scheme. A maximum loan of Rs 5 lakhs can be availed under PMRY
- Pradhan Mantri Mudra Yojana for Women – Women eager to start their own business can make use of this scheme. This scheme aims to raise the position of women by providing access to funds and by encouraging them to initiate their own ventures
- Agriculture loan – Individuals who are aged 22 and above and are engaged in the agriculture industry are eligible to avail of this loan
Also, for individuals who earlier earned a high salary, the probability of getting approval from your existing bank will be higher.