The need for credit could arise at any moment for anyone. While availing big loans like a home loan or vehicle loan, there is some amount of pre-planning that must be done.
Also, there may be individuals who are out of work due to a host of reasons like health issues, availing a sabbatical, starting a venture on their own, period of break between two jobs, or maybe have some alternate sources of income.
When it comes to lending, lenders are always comfortable lending to individuals with a regular stream of income, like salaries. Of course, your credit score also matters in this regard and other factors like other loans being serviced count towards the overall decision making.
But, what about all those people who may not have a job and yet have the need for credit? What are the options available to them?
As your credit coach, we bring some easy ways through which you can avail a loan even without a job in hand.
Loan Against Property
A property in your name is a big asset. An immovable property or land is worth quite a lot. If you require a big-ticket loan to buy another property, fund your venture, or fund higher education of your children, a loan against property may be your savior.
As this loan is granted against the security of your property, your income may not be of much consequence. When you apply for a loan against your property, you are generally granted around 60-75% of the value of the property, which might again vary depending upon the age of the property, state of the property, location of the property, etc.
If you are sure of repaying the loan availed against property on time, then it might be a great way of monetising your asset at the time when you need it the most.
Additional Reading: Know Key differences between a Home Loan and a Loan Against a Property
Gold is an asset most loved by the Indians. Reports say that Indian households are the world's largest hoarders of gold hoarding close to 24000 tonnes of gold. When you are in urgent need of credit, drawing a loan against this precious asset is an excellent tool for the situation.
Like a loan against property, a gold loan also involves a loan against an asset, taking the form of a secured loan. Therefore, your income status will not be of much concern to the lender.
Moreover, gold loans are disbursed quickly unlike a loan against a property. These days, some Gold Finance companies also take the trouble of coming over to your place with a Gold Assessing Machine and making instant disbursement of loan to your account.
Additional Reading: How gold loans can help you build your credit score?
Insta /Same Day Loans from Banks
If you have been a prudent and good banking history with your banker, then you may be eligible for an Insta or Same Day loan from your bank. This is something like the Pre-Approved Loan messages that you keep receiving quite often.
These loans are approved for selected customers of the bank only. These loans do not require any documentation and the amount so availed is generally adjusted against the credit limit of your credit card. The same would need to be repaid like a normal credit card outstanding bill but on EMI basis. The rate of interest chargeable in these cases would be high but can be of great use in cases of emergencies.
To be able to be eligible for such loans, you would need to have a good credit score.
Loan Against Securities
You might have various insurance policies or holding in stocks and shares as investment. Did you know you could avail a loan against the security of these investments?
Similar to a gold loan or loan against property, you can pledge your insurance policies or shares against which a loan is approved for your use. The main advantage here is that your investment continues to grow in spite of you pledging it.
However, drawing a loan against shares might be subject to a lot of other conditions like the general economic conditions of the country, financial propects of the sector in which the company operates and also the stability of the company.
When it comes to insurance policies, only endowment and money back policies that have maturity values are allowed to be pledged for loans.
Loans from NBFCs / Co-operative Banks
While banks have extremely stringent criteria for approving loans, Non Banking Finance Companies or Co-operative banks have relaxed criteria for lending.
If you are able to demonstrate your financial standing in spite of not having a job, then you may be allowed small amounts of loans for short tenures. Co-operative banks often require you to take membership with them on payment of certain sum of amount post which you may be eligible for a loan.
Loans from Fintech Lending Companies
Fintech lending companies are those that provide short-term loans to individuals generally not served by the traditional sources of credit like banks. These companies employ their proprietary algorithms for assessing the creditworthiness of their applicants. They take into account many factors like the social media imprint, your online shopping behaviors, etc., which can help them determine the creditworthiness of an individual.
Also, it involves less documentation and these loans are disbursed quickly. These loans are made available to the self-employed and also with alternate sources of income.
Micro Finance Loans
There are many individuals at the lower rungs of the society who may be doing odd jobs for their living. They may be earning but may not have proper papers to prove their employment. To help them set up small scale business or enterprises, there are loans available from the microfinance sector.
These loans are generally lent on joint liability of a particular group. Very low amounts of loans are also possible to be availed here.