Availing a personal loan is easy if there is a steady source of income for the applicant. This is one of the most important decisive factors since a loan can be repaid only when there is a steady source of income with the applicant. It is based on the income that a personal loan application is either approved or rejected. So, the question is, how to avail a loan if someone is unemployed? Does that mean an unemployed individual cannot avail a loan?

There are many lenders who provide personal loans even if an applicant does not have a stable job. The interest rate, loan tenure and other factors are different from loans offered to income earners. However, these won’t stop you from getting finance from various lenders. You can get such loans in the form of secured loans, payday loans and government personal loan schemes for the unemployed, to name a few.

Types of Loans for Unemployed

  • Secured Loans - Unemployed individuals with no income can apply for a secured loan. Taking a secured personal loan is one of the smartest decisions since it allows an individual to fulfil different financial needs. Such a loan can be availed against a security or collateral. Even if an applicant is employed but does not have a steady income to show to the lender, he or she can apply for a secured loan. By giving a collateral/security, the lender can further trust the applicant even if there is no source of income. In such cases, the applicant’s profile is considered less risky and a lender can trust the applicant as far as repayment is concerned.

  • Unsecured Loans – Such type of loan allows a person to avail credit without pledging any asset or security. These loans come with higher interest rates and one can easily get it by arranging for a guarantor. 

  • Gold Loan – If an unemployed individual is a homemaker or housewife, he or she can use gold jewellery as an asset to take a loan against the same. There are many lenders out there that offer you this facility at an attractive interest rate so that your needs can be fulfilled.

Government Loans for Unemployed in India

  • Prime Minister Rozgar Yojana - Under this scheme, the Government of India offers loans to unemployed so that they can kick-start their own venture. Anyone who is educated till 8th standard is eligible to apply for a loan under this scheme. Individuals aged between 18-35, who are unemployed can avail a loan of up to Rs. 5 Lakhs. However, in such a case, the income of the beneficiary along with the income of his/her parents should not exceed Rs. 1 Lakh per annum.

  • Loan Subsidy Scheme - Under this scheme, 25% of the loan amount will be subsidized by the State Government. Well, this scheme is not available across all States.

  • Cash Loans – This is a State-funded initiative that has been started by the Government of West Bengal. Under this scheme, an employed person aged between 18-45 can apply for a loan of up to Rs. 50,000.

  • Agriculture Loan - Those individuals engaged in the agriculture sector can avail the benefits of this scheme. Under this scheme, the government has collaborated with many banks and financial institutions to give agriculture loans to unemployed youth in the country. People who can apply under this scheme should be aged 22 or above.

Additional Reading: Government Loan Scheme for Unemployed Youth

Lenders of Personal Loans

  • State Bank of India - State Bank of India offers SBI Pension Loan to Central or State Government or Defence pensioners who can draw their pension from any of the SBI branches. Here are some of the main benefits:

    • Flexible repayment tenures

    • High quantum of financing

    • Competitive interest rates

  • LazyPay - LazyPay is a subset of PayU that offers instant personal financing facilities to customers. You can get a loan of up to Rs. 1 lakh with LazyPay. To avail of this loan, you need to download the LazyPay app and apply. Some of the key benefits include:

    • Instant approval

    • Minimal documentation

    • Flexible repayment options

  • SmartCoin - SmartCoin is an app-based money lending platform designed to cater to the middle- and lower-income strata. The interest rates are on the higher side because of the short loan tenure, however, some of the key benefits include:

    • Quick loan disbursal

    • Minimal documentation

    • Repeat loan facility available

    • Paperless application process

  • Bank of India - Bank of India offers BOI Star Pensioner Loan Scheme to retired employees who can draw a regular pension through the bank branch. The net pension of the applicant after the loan EMI is deducted should be at least 40% of the total pension amount. Some of the benefits are:

    • Low-interest rates

    • High quantum of finance

    • Minimal documentation for processing

  • Punjab National Bank - Punjab National Bank provides personal loans to pensioners who draw their pension through any of PNB’s branches. This loan can be useful in meeting the medical expenses of pensioners during any emergency situation. Borrowers can avail a loan multiple times based on the adjustment of the previous loan. Benefits include:

    • An easy source of finance

    • Attractive interest rates

    • Flexible tenures

Additional Reading: Loans for Unemployed

Important Things to Consider While Applying for Personal Loan

If you are unemployed and are looking to apply for a personal loan then here are some of the important things you must consider before making your decision:”

  • The advertised interest rate may differ from the final rate offered and is at the sole discretion of the bank.

  • Defaulting on such loans may result in high penal charges.

  • Calculate the EMI through an online EMI calculator to know the monthly instalment amount.

  • Ensure that you have enough funds to make timely repayments.

End Note

Although you can easily get a loan even if you are unemployed, it is always important to consider the reason why you would need to apply for a loan. Availing a loan means an accruing debt which you cannot afford if you are unemployed. Hence, you must avail a loan which you can repay in time and hence you must be specific regarding your loan amount and repayment amount.


  1. Is a co-applicant necessary to apply for a personal loan?

If you are unemployed then a co-applicant will be needed while making a personal loan application. The bank takes into consideration your occupation and annual income as it helps them determine the rate of interest, they should levy on your loan amount and whether you will be able to repay the loan back in time. Your co-applicant should be someone you trust most preferably from your family such as your parents, siblings, spouse, etc.

  1. Is my Credit Score important if I am looking to avail a loan for unemployed?

Your credit score is extremely important in getting a loan, especially if you are unemployed. Higher your credit score, better your chances of getting a loan. There are lenders in India who do offer loans even if you have a low credit score. However, in these cases, the minimum credit score you may have to maintain is around 600. 

  1. If I am unemployed, should I look to avail a loan from the bank in which I hold an account?

Irrespective of whether you are employed or not, if you are looking for a loan, then it is always recommended that you visit the bank in which you hold an account. If you are an existing customer, the bank will surely look to help you avail a loan and recommend ways through which you can repay the loan in time even if you are unemployed.

  1. Are there loans which I can avail against collateral?

Yes, there are loans which you can avail against collaterals. For example, if you own a property, then you can avail a personal loan where you pledge your property as collateral. Similarly, you can pledge your bonds, stocks, and even your FD returns which would help you avail a loan. You can also avail a gold loan if you have gold to pledge as security.