An income proof or proof of income is one of the key requirements when applying for a personal loan.
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Personal loan have become one of the most common types of loans due to the numerous benefits that they offer, such as quick access to funds and the flexibility of their purpose.
These loans provide quick financial relief to borrowers who settle to solve an emergency expense.
To be eligible for a personal loan, there are some requirements that a borrower needs to meet, and one of them is being able to provide verifiable income proof.
Proof of income assures the lender that you have the financial capability to repay the loan, and this motivates them to release the needed funds.
The inability to provide this often lead to lenders refusing to grant a loan, which can be very disappointing, especially if you have a sudden expense that needs to be settled as soon as possible.
The good news though is that there are some lenders who offer personal loans even when you are unable to provide proof of income.
Keep reading to find out How to get a personal loan when you have no income proof.
No Income Proof? This is How You Get A Personal Loan
The inability to provide proof of income doesn’t totally cancel one’s chances of getting a personal loan.
Although it is a vital requirement, there are some lenders with flexible loan policies, who agree to grant borrowers personal loans using other criteria.
Some of the alternate requirements include the need for a guarantor, a great credit score, alternate sources of income, and so on.
To be able to make optimal use of this option, ensure to contact multiple lenders to hear what they have to offer, and then compare to get the best one.
It is, however, important to note that you may not like the terms of these loans, as they have some downsides such as high-interest rates and fees, limited funds, and short loan duration.
Personal Loans That Don’t Require Proof Of Income
Naturally, personal loans are often unsecured, meaning they don’t require collateral to back them. In lieu of collateral, the lender approves your loan based on your income and credit. This means that if you don’t meet these two requirements, getting a loan is impossible.
However, there are some lenders who grant loans to borrowers who don’t have one of these two vital requirements, which is proof of income. These loans come in three forms:
- Secured loans.
- Personal loans for excellent credit.
- Pawnshop loans.
One of the options for borrowers looking for personal loans that don’t require proof of income is a secured personal loan. As opposed to traditional personal loans that are unsecured, these loans require collateral such as property, money, or some other asset.
The most common form of these loans is the car title loan which is gotten using the title of one’s car. They are also known as Auto title loans.
How it works is that instead of trying to verify your income, the lender looks at the value of your car. The amount you are allowed to borrow usually ranges between 25% and 50% of the car’s value.
To qualify, you’ll have to surrender the title of your car to the lender. Most of them usually prefer that you fully own your vehicle, while some will agree to loan you money if you meet certain equity thresholds.
The lender may also need your photo ID, proof of insurance, and an extra set of keys.
These loans often have short terms and the amount which you are allowed to borrow is usually small but they still remain a great option when you need money quickly.
The downside of a secured loan is that you risk losing your property if you can’t pay back the loan.
Other forms of secured loans include:
- Vehicle loans.
- Mortgage loans.
- Share-secured or savings-secured Loans.
- Secured credit cards.
- Secured lines of credit.
Personal Loans for Excellent Credit
Another way for borrowers looking to get a personal loan but can’t provide a proof of income is to have a credit score of 740 to 850. There are some lenders who are willing to grant personal loans based on a borrower’s credit, regardless of their ability to provide a proof of income.
If you find yiurself in need of a personal loan but can’t get one due to the issue of income proof, you can try pawnshop loans.
Pawnshop loans are a type of personal loan that allows borrowers to pawn personal items such as a TV, a laptop or jewelry. How it works is that a borrower will drop their property in exchange for immediate cash, which they can then retrieve after the loan is repaid in full.
Similar to a secured loan, your asset is held until you complete payment, and your eventual inability to make payment will lead to the loss of your property.
How to Qualify for a Personal Loan With No Income
If you wish to get a personal loan but can’t provide a proof of income, consider the following options as alternatives:
1. Get a guarantor: If you can’t provide proof of income for the lender, an alternate option is to apply with a co-signer who can. This reassures the lender that even if you are unable to repay the loan at the end of the day, your co-signer can be held responsible.
2. Use collateral: You can also back the loan with an asset such as a vehicle or your home. This gives the lender an assurance that even if you default on the loan, they can always sell your property and recover their money. This option may not be the best as it puts your property at risk.
3. Proof of an alternate income: Most lenders often prefer proof of a steady monthly income when you are applying for a loan. However, if you don’t have that, there are some lenders who would accept proof of alternate income such as a rental income, alimony, Social Security benefits, side gigs, interest income from investments, and so on.
4. Improve your credit score: In some cases, lenders might overlook your inability to provide proof of income if you have an excellent credit score.
5. A good relationship with the lender: If you’ve established a great relationship with the lender and have previously proven to be a trustworthy borrower, they might decide to approve your loan without the requirement of proof of income.
6. Find a lender with flexible eligibility terms: You can also find a lender with flexible loan policies. Such lenders might be able to grant you a personal loan even when you don’t have proof of income.
7. Settle your current debts: If your credit history shows that you are the type of borrower who is always punctual with your repayments, lenders might trust you enough to let you take a loan without proof of income.
Upsides and Downsides of No-Income Loans
There are some lenders who would agree to grant you a personal loan even when you can’t provide proof of income. These loans are referred to as No-income loans and may come in the form of secured loans or pawnshop loans.
Even though these loans serve as a solution to the issue of being unable to provide proof of income, they also have their disadvantages. Below are some upsides and downsides of these types of loans:
Upsides of No-Income Loans
- Fast access to funds: No-income loans tend to provide you with quick access to the needed funds so you can settle your bills as soon as possible. These types of loans include car titles, pawnshop loans, and so on.
- No proof of income needed: These loans spare you the trouble of striving to secure and provide proof of income before you can get a loan.
- Opportunity to use alternate sources of income: If you can’t provide proof of steady monthly income, these loans let you use proof of alternate income such as alimony, child support, social security benefits, and so on.
- No need for good credit: Some of these loans may not even require a good credit score before they grant you a personal loan.
Downsides of No-Income Loans
- High-interest rates and fees: One of the downsides of these loans is that many of them often come with high-interest rates and fees.
- Short loan duration: Unlike traditional loans that allow you to make payments over several years, no-income loans usually have a short repayment period.
- Limited funds: For these loans, there is usually a limit to the amount that you can get.
- Cycle of debt: Due to how short the repayment periods of these loans are, many borrowers are often forced to roll over the debt into a new loan if they are unable to complete repayment on time.
Alternate Options of Financing for No-Income Loans
If you don’t qualify for no-income loans or you find the terms of the loan unacceptable, there are other options that you can make use of, such as:
- Home Equity Loans: This is a type of secured loan where a borrower uses their home equity as collateral. They can use the equity which they have in their home to get a loan, and then pay back the loan with interest within a period of time. Since they are secured, these loans often come with good interest rates. The downside though is that you risk losing your home if you fail to keep up with your monthly payments. If this option is available to you, you may want to use it instead of stressing yourself over a No-income personal loan.
- Home Equity Lines of Credit (HELOCs):This type of loan works like a credit card and sometimes, a borrower is given a credit card to use for buying things on the line of credit. The lender usually sets a spending limit for the borrower and the borrower can use the credit card given to them to make withdrawals within a period of time referred as the draw period.
- Credit Cards: A credit card is a type of credit that allow cardholders to borrow funds to pay for goods and services. If you possess a credit card, you may want to use it in lieu of getting a personal loan.
Income proof is a very important requirement when applying for a personal loan but in a situation where you are unable to provide one, there are lenders who are willing to grant you the loan, under certain conditions.
Hopefully, we’ve been able to help with information on How to get a personal loan when you have no income proof.