Credit Options: What To Do When You Lose Your Job

Paying off debt and becoming financially stable is a worthy goal to have. Of course this means taking action, setting a budget, handling credit card debt and maybe even consolidating or settling your debt. These are all important steps to take, provided you have a steady source of income. But what happens if you just lost your job and you need money for an emergency?


If you've lost your primary source of income, but you need a loan to get by, your options might be limited, but you're not out of luck. You can still get a loan (such as an auto title loan), even if you don't have a job. Some of the options are not ideal financially, but when you need cash and you don't have enough money coming in, at least there are some options to consider.

Borrowing Options If Unemployed

The first types of loans are those that allow you to borrow against something that you already have invested in. Among them are a home equity loan (or line of credit), borrowing against a life insurance policy or a 401K retirement account. If you don't have much accumulated debt, you'll have a better chance to qualify for the equity line. The other loans are not based on income, but what you have already accumulated in value. Borrowing against your own retirement will hamper its growth -- even if you repay it with interest -- but hard times make for hard decisions.

You could also consider asking someone with solid credit and a secure source of income to co-sign a loan, sharing the risk with you. Your job loss might also give you an opportunity to qualify for government grant or loan programs to help with educational opportunities to better position you in the workforce.

Loan Options For Emergencies

A variety of other types of loans are available and are actually largely intended for those who either are having financial difficulties, including those who have lost their jobs, or have poor credit. Because these loans are available to virtually anyone, the cost of obtaining them is usually far higher than conventional loans and it is important to understand the costs associated with them before borrowing.

Among your options:

Auto title loans. You use the value of your car (if you don't owe any money on it) as security for a loan with a typically steep interest rate. The Center for Responsible Lending says a typical title loan of $951 will cost a borrower $2,140 in interest.

Pawnbroker loans.

Pawnbrokers will let you bring in items of value, anything from a musical instrument to jewelry, and let you borrow against a percentage of what they say it's worth. After receiving the cash you typically would have a month to repay the loan, or pay for an extension, or risk forfeiting the item in lieu of paying.

Same-day loans.

While same-day loans allow you to borrow in advance of receiving a check from your employer, you may still qualify even if you are unemployed. If you have an unemployment check, some lenders will let you borrow against it. However, these loans come with high fees that make them costly and inappropriate for expenses other than emergency needs.