Can I get a payday loan if I am unemployed?
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UPDATED: Nov 7, 2012
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Yes, it is possible to borrow a payday loan if an applicant is unemployed. However, not all lenders will lend to unemployed borrowers.
Even though lenders usually do not approve unemployed applicants for things such as car loans or home loans, payday lenders are another story. Payday loans are forms of very short-term financing that have very few qualification requirements.
Fortunately for many people, payday lenders do not always require a borrower’s income to come from a job. Many are willing to approve other sources of income. Some alternative income sources include the following:
- Social security
- Unemployment benefits
While the slow economy has resulted in many pensions being cut, unemployment benefits are now more common due to layoffs and a weak job market.
For many people, unemployment benefits are their sole source of income, if even for a temporary period of time. Lenders are perfectly fine being paid with the income that borrowers receive from unemployment.
However, some lenders will require that applicants provide recent pay stubs to prove they have a paying job. While applicants that were recently fired could hypothetically show their recent pay stubs in order to borrow money, doing so can result in charges of fraud and even embezzlement depending on a borrower’s state laws.
Even though it is certainly viable to pay off a cash advance with unemployment benefits, it may not be the wisest decision for borrowers. Payday lenders charge very high interest rates and fees. These can prove difficult to repay and can lead to mounting debt or rollovers from one month to the next. Since unemployment benefits are only available for a temporary amount of time, it is possible that a borrower may be unable to repay a cash advance once time runs out.
The end of unemployment benefits does not mean the end of repayment options though.
Unemployed borrowers who do not have unemployment benefits can still repay a payday loan by selling valuable items or possibly even using a credit card to pay off their debt.