Loans are a fairly contentious topic, all things considered – especially with the way that the global economy has been looking in recent years. It seems like consumers aren’t getting any breaks lately – with inflation rates rising, along with interest rates and prices for just about everything, money is tight for some of us out there.
Adding onto that stress is the fact that in many countries, unemployment rates are rising quickly. While there are some safety nets available, that doesn’t always fix everything – unemployment benefits aren’t some magic wands, or something like that.
With that in mind, it’s not hard to see why more and more folks are thinking about loans even if they don’t have some form of income. The question is – how does that sort of thing work? There are a few answers to that question, of course, and that’s what we’ll be covering today.
While it can be daunting to sort out borrowing money without income, it certainly doesn’t make a person ineligible. Rather, it just takes some know-how to navigate that sort of situation, so be sure to stick around if you want to learn more about how that works!
Understanding Loans
Before we delve into some of the complexities that come with applying for a loan without income, let’s first explore what they are. For our purposes, we can define loans as financial agreements in which one party (the lender, which will be some sort of financial institution) provides money or resources to another party (the borrower). Baked into this agreement is the expectation that the borrower will repay the loan amount in the future.
Something to keep in mind is that more often than not, there will also be an interest rate for the borrower to contend with – in explanation, this is essentially the fee that we as consumers pay for the ability to borrow the money in the first place. It’s calculated based on a percentage of the principal (initial) amount that is disbursed in the loan.
Income Contingency
With some loans, there will be prerequisites in order to qualify for them. We’ll be focusing on income contingencies since that’s the most relevant for us today. Traditionally, this name is given to student loans, but that isn’t the only situation in which this comes up.
Essentially, the idea of these sorts of credit agreements is that they provide a more flexible option for repayment, and it means a borrower isn’t automatically denied due to a lack of income. Of course, not all lenders even offer this as an option, so don’t necessarily expect it.
Rather, try to do your research beforehand to discover whether or not the financial institution you’re interested in will offer an option like this. Overall, income contingent loans can be a beneficial option for borrowers who may have uncertain income levels or financial situations – they can be extremely helpful, but they aren’t always available.
Fixed Income Versus Other Income
Now, another aspect of this is the matter of fixed income versus other forms of income. Fixed income is basically when you are working for a company officially, and have scheduled paychecks from them on a regular, rotating basis. In Norway, it specifically means that your employer pays National Insurance for you and any other employees they have.
This does count for both full-time and part-time positions, and it’s definitely something to keep in mind. After all, most of the time when a lender is inquiring about a borrower’s income, this is what they’re referring to. However, this isn’t the only option out there for earning money, as most of us probably already know.
Self-employment refers to a work arrangement in which an individual operates their own business, freelances, or provides services on a contract basis, rather than being employed by a company or organization. This is certainly something that counts as income and can be mentioned on a loan application.
In fact, you can learn more about how that works here: billigeforbrukslån.no/lån-uten-fast-inntekt/ if you’re curious to read more about it. Seeing as self-employed individuals are responsible for managing all aspects of their work, including finding clients or customers, setting prices, handling finances, and managing day-to-day operations, it’s hardly fair not to consider this type of income “legitimate.”
Just bear in mind that some of the eligibility will be dependent on things like what a person reports on their tax forms each year. This is mostly just to ensure that no one is lying on a financial application when it comes to their finances.
Other Forms of Non-Fixed Income
What else is there, then, that can help you qualify for a loan even if you don’t have a fixed income? The answers are fairly simple: pensions, social programs, sickness benefits, unemployment income, or disability benefits.
All of these can help a person qualify for a loan, although in some cases, it may be on a temporary basis. Certain credit agreements can be made with the stipulation that the borrower obtains a fixed form of income within a certain amount of allotted time. Of course, for something like disability benefits or a pension, this isn’t necessary.
Qualifying Without Fixed Income
Now, we get to the crux of today’s article – how can a person qualify for a loan without steady employment? What are the other necessary requirements involved? This will probably vary based on where you are, so we’ll be focusing on how this works in Norway for now.
One of the primary requirements is that the borrower needs to be at least eighteen years old. In most cases, they also can’t be over seventy years old. Fixed income isn’t a requirement, but borrowers must be earning money in some sort of fashion – the former section details this further.
Here in Norway, the borrower must be a citizen, or have lived in the country for at least three years to qualify. The other main thing to keep in mind is that if you have payment notes (have an active debt collection situation), most banks and financial institutions will not approve you.
How it Works
Applying for a loan in these sorts of situations is pretty much the same as if you had a traditional employer. You’ll need to procure the proper documentation as always – that means you’ll need your identification (a passport or photo identification card of some sort), proof of income (whatever the source of it), and tax documents.
Additionally, they’ll probably be checking your credit score. If you aren’t familiar with this concept, essentially, there are credit bureaus who track the credit history of consumers across the world. There are plenty of free programs that allow consumers to check on their scores, thankfully.
The higher a person’s score, the better their chances of being approved for a loan. Beyond that, higher scores also mean that a borrower will qualify for a lower interest rate than someone who has a lower score. This is obviously favorable, since it will mean that the person then pays less money as a whole for borrowing money.
Of course, something else to keep in mind is that you’ll want to know precisely what you’re utilizing the loan for. There are several types of loans, and depending on what your plans are, you may want to apply for one of those niches. Seeing as there are also more “generic” personal loans, though, you don’t need to worry if you don’t see a category that jumps out to you right away.
Overall, while it can certainly be difficult to apply for these credit agreements and undergo the screening process, especially if you don’t have fixed income, it tends to be well worth the stress in the end. Don’t be intimidated – hopefully this guide has helped you gain some confidence on this subject, at least!
