Is it possible to take out a loan if you are officially unemployed

If I work informally, will I get a loan?

Yes, they will. However, the conditions will not be the same as for the officially employed. The bank or other credit institution, upon approval of the application, will assume increased risks. The likelihood that you will repay the loan on time without a stable official salary is lower. This will affect the value of the interest rate, loan term and other conditions, and not in your favor.

What kind of loan will it be?

Receiving a black salary and not having other stable sources of income, you can count on a consumer loan (for example, for vacation, medical treatment, or without a specific purpose, that is, an inappropriate loan). You won't be able to take out a mortgage.

Who will give the money?

There are two options here: go to a bank or another lending institution, such as a microfinance institution.

You can contact the bank on your own or through a credit broker - a company that acts as an intermediary between you and the bank. The broker himself searches for you the most advantageous offers from banks, which are most likely to approve the application, prepare the documents and send them to the credit institution. For their services, the broker usually asks for 1-10% of the amount.

The second method will be as unprofitable as possible, and the interest is simply cosmic (1-2% per day). In this case, the borrower may be obliged to immediately pay a commission for services in the amount of 10–20% of the loan value or to take out life insurance in a specific company that offers not the most favorable conditions. But getting such a loan is simple: usually just a passport is enough.

What conditions can you expect?

Usually, for the officially employed and officially unemployed, the bank operates the same credit programs, but the conditions for them are different. In the second case, the rate is 2-3% higher, and the loan amount is less. But there are nuances here.

It is important for the lending institution that you verify your source of income. For example, if you do not work officially, but have real estate that you rent out and receive monthly rent, the bank will regard this as a permanent source of income. In this case, you can get a loan on more favorable terms, close to those offered to officially employed citizens.

Another situation in which the bank will meet you halfway is the provision of collateral. Best of all - a firm pledge. To get a loan on normal terms, you will need to prove that if you suddenly cannot pay it off, the bank will be able to appropriate your property (for example, an apartment, house, car) and thereby cover the costs. As collateral, you can also involve a guarantor - a person with an official stable income sufficient to repay the loan, who will take all the risks.

When giving a loan to an unemployed, the bank may require a higher down payment (about 30-50% of the amount), so be prepared for this.

What documents are required for registration?

If you can confirm the receipt of income in any way, do so. For example, provide the bank with a statement of the flow of funds on the account or receipt of money from third parties (no matter what is indicated in the purpose of the payment), an account statement for the last couple of months, and so on.

As in other cases, you will need to fill out a questionnaire. Indicate your place of work, even if it is informal, and the amount of real monthly income. You shouldn't overestimate your income: the bank checks the information. If a discrepancy is revealed, you will be denied a loan without explanation.

How will my creditworthiness be checked?

The bank can act in different ways.

If the loan amount is large, you will be checked by the security service. Her employee will find out if the company that you indicated as a place of work exists, on what conditions they work there unofficially, and what conditions you have. Such a check can take place by phone or in person - security officers often visit the site.

If the loan is small, you will be checked by a personal manager who accepted your documents. He will call your manager, find out how much you actually get, and clarify how satisfied the employer is with you. All this will allow the manager to understand whether you will receive a stable monthly income in this company in the near future and, accordingly, repay the loan on time.

If you have a positive credit history, this will be a plus in both cases. At the same time, it is better if you previously took and successfully repaid loans at the very bank where you are applying now.

Is it profitable to take out a loan if I am not officially employed?

It turns out that no. In all respects, you lose to workers with a gray or white salary. The procedure for obtaining a loan is more complicated, the likelihood of the application being approved is lower, the amount is lower, and the interest rate is higher.