Ways To Get a Personal Loan For Unemployed Individuals in a Financial Emergency

A financial emergency can come from anywhere to anyone without any warning. In such times, when you need urgent money, a personal loan can come to your rescue. But before giving the required loan amount, lenders like to check the credit history of an individual and whether they have a stable income or not. That’s why getting a personal loan for unemployed individuals is a bit tougher as compared to salaried and self-employed individuals who have a regular source of income. However, there are several personal loan options that unemployed individuals can choose where they don’t need to show any proof of income. 

If we were to put loans into two categories, they would be secured and unsecured loans. An individual has to put  security as collateral against the loan amount in case of a secured loan, while lenders provide the loan amount without any security in the case of unsecured loans. Some of the popular methods to get a personal loan for unemployed individuals are as follows.

  1. Gold loans
  2. Pension loan
  3. Loan against Fixed Deposits
  4. Loan against a Life Insurance Policy
  5. Loan against Mutual Funds
  6. Loan against Shares

In this article, we will be discussing these loan types in detail so that you can understand them better, and choose the right option for you. We are starting with Gold Loans. Do read to know more!

Gold Loan

A gold loan is one of the most popular types of personal loan for unemployed individuals. The reason: an individual only needs to own gold, and he or she will be good to get a gold loan without any hassle at affordable interest rates. With a gold loan, individuals can get a loan amount up to 65% to 90% of the overall gold value (changes from one lender to another). This is known as the loan-to-value (LTV) ratio. Coming to the interest rates, it generally ranges from 11% to 16% per annum on average. Having a good existing relationship with a lender can get you more affordable interest rates. 

Pension Loan to Pensioners

One of the most efficient methods to get a personal loan for unemployed individuals is to get a pension loan from the State Bank of India (SBI). However, do remember that this loan can only be given to those individuals who are below 76 years of age, and are Defence Pensioners, Central, and State Government Pensioners, or Family Pensioners. The maximum loan amount with this facility can go up to INR 14 lakhs with a repayment tenure of 14 to 84 months according to an individual’s convenience. 

Loan Against a Life Insurance Policy 

Do you know that your life insurance policy can also get you out of a financial crisis apart from providing financial protection to your loved ones in case you die during the policy? No? Well, you can get the same. Here, the loan amount depends on your surrender value. Hence, to get a loan against your policy, it must have acquired surrender value. Usually, the loan amount can be 80% to 90% of the overall surrender value. Do remember that when you are getting a personal loan for unemployed individuals through a loan against the policy, you cannot get it right after you buy it. 

Loan Against Fixed Deposits

In a financial emergency, you can also opt for a personal loan against your fixed deposit where the loan amount will depend on the overall fixed deposit value. Lenders usually provide a loan amount from 70% to 90% of your overall FD value. Here, the interest rates will be generally 2% to 3% above your prevailing FD rates. Suppose you are getting 4% on your FD, the interest rates on a loan against FD will range from 6% to 7% per annum.

Some other options to get a personal loan for unemployed individuals are loans against mutual funds, shares, National Savings Certificate (NSC), etc. One of the best things about all these options is that you don’t need to go through a strict eligibility criteria.