Personal and consumer loans for unemployed people in the United States

What a personal loan is, and what it is not

A personal loan is a lump sum repaid in fixed instalments over a set period. Unlike an auto loan it usually has no collateral, so the lender relies mostly on your credit record and your income.

That is the difficulty for a jobless applicant. Without regular earnings, a mainstream lender may decline or quote a high rate, and the fast, easy offers online are often the most expensive ones.

If your need is a few hundred dollars, say so when you ask. Smaller, shorter loans from a member-owned lender are often easier to manage than a large one, and borrowing less leaves room in the budget if the job search takes longer than planned.

What the lender looks at

Expect questions about your credit history, current debts, housing costs and any income you can document. Benefits, a partner's pay, a pension or a signed job offer may be considered, depending on the lender.

Credit unions often explain their own criteria on the loan page. Self-Help Credit Union, for example, says its signature loan is aimed at members with solid credit, while also offering a credit builder loan meant to help establish or repair a record.

• Credit report, including collections and recent late payments.
• Total monthly obligations against documented income.
• Length of time at your address and with your bank.
• Whether a co-signer is available.
• The purpose and amount requested.

Lending circles: a zero-interest social option

Mission Asset Fund runs Lending Circles, in which groups of 6 to 12 people pool money and each member receives the loan in turn. Its page lists amounts from 300 to 2,400 dollars, typical monthly payments of 50 to 200 dollars, and reports payments to the three credit bureaus.

The page does not list eligibility rules or locations, so start with the online application and ask the organization or its partners what applies where you live. A circle works only if you can keep making the monthly payment, since others depend on it.

Credit-building loans from member-owned lenders

Some credit unions design small loans to build a record rather than to fund a purchase. Self-Help describes its credit builder loan as a way to establish new credit or add a positive entry, with free credit score reviews and one-on-one coaching.

Before applying, ask whether part of the money is held until the loan is repaid, what the APR is and whether you can afford the instalment on benefits alone. The cheapest loan is still harmful if a missed payment follows.

The payday loan trap

The Consumer Financial Protection Bureau describes payday loans as short-term, high-cost loans, often 500 dollars or less, due on the next payday. Fees of 10 to 30 dollars per 100 borrowed can mean an annual rate of roughly 400 percent on a two-week loan.

Lenders may debit your account directly, and renewals add fees while the original amount stays unpaid. When you are already short of cash, a single repayment of the whole balance is the very thing that is hard to meet.

Cheaper routes to try first

Ask the creditor for a payment plan or a later due date, which costs nothing to request. Call the utility, landlord or hospital billing office before borrowing to pay them, since many have hardship procedures.

A small advance from family, written down with a date and amount, can also protect the relationship. Local nonprofit credit counselors can look at the whole budget and tell you whether a loan is even the right tool.

How to protect yourself

Ask for the APR, the total repayment and every fee in writing. Walk away from any lender that guarantees approval, asks for money up front, or pressures you to decide in minutes.

Keep a record of each application and apply sparingly, because formal applications can leave inquiries on your credit file. If something goes wrong, you can complain to the CFPB or your state regulator.