Loans for Unemployed
Maintaining a stable financial state can be difficult. With the constant rise in economic standards and the regular flow of bills, your financial condition can be unbalanced. Unemployment can also be an obstacle when it comes to meeting your dues. While loans can be the ideal answer when you need cash, banks firmly reject customers without constant income. On the other hand, online loans strive to offer their customers the opportunity to receive fast cash without any trouble.
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The following loans may be an option for unemployed borrowers:
Doorstep Loans
A doorstep loan or a home credit loan can only be borrowed in person. The lender comes to the borrower’s home and issues the loan at the doorstep, hence the name of the loan. Many unemployed individuals may prefer this borrowing system because it is easier to obtain. In addition, most banks have a minimum borrowing limit which may not be suitable for the borrower. However, a doorstep loan offers smaller amounts and carries high-interest rates. This makes it a good alternative if you want quick cash to address emergencies, such as paying a medical bill, home repairs, or car repairs and paying it back in installments over a couple of months.
Secured Loans
A loan is tied to collateral like a car or a house. Secured loans carry lower interest rates because the lender has less risk if the borrower defaults on the loan. Even if you are unemployed, you may have valuable possession such as a car or a house to use as collateral and borrow a secured loan. However, consider getting a secured loan as a last resort because if you can’t repay the loan, the loan agent can legally repossess your valuable item.
Guarantor Loans
A guarantor loan is where a financially stable person co-signs for the loan alongside the borrower. The guarantor will be responsible for making repayments when the borrower can’t, making the two individuals legally liable for the loan. Therefore, lenders are more likely to approve your loan request because there is less risk of failing to pay back the loan.
Loans
Loans are a form of short-term cash advance to help you through a financial emergency. Loans are offered ahead of your next, and borrowers are required to repay the loan in one lump sum using their upcoming paycheque. However, they carry high-interest rates and impose penalties if the borrower fails to repay the loan. Unemployed individuals may still qualify for a loan if they have alternative sources of income such as unemployment benefits, spousal allowance, disability income, or social security benefits.
Requirements for Applying to Loans for Unemployed
As with most loans, there is a list of requirements to be met to proceed with a loan application. Typically, minimum requirements include:
- You must be 18 years of age.
- You must provide proof of residency.
- You must present the lender with a plan to repay the loan through documentation.
- You must have an active bank account.
However, the lender may require additional documents from unemployed borrowers to ensure they have a steady source of income and can pay back the loan on time.
Advantages of Loans for Unemployed
While these cash advances might be appealing primarily due to their fast solutions, they present their customers with several other benefits as well.
Speed
With the loan process beginning online, you will be met with fast responses and speedy service. Acquiring a loan can be stressful, but what can make it even more nerve-wracking is waiting for a long time to get the results, especially when you are unemployed and require the money for an emergency. With online loans, you do not need to stop any of your plans waiting for an answer; your loan request results will reach you just when you need them.
Flexible
Online loans from direct lenders can offer their customers more flexible terms and conditions to accommodate their cases. With large banks, you might face standard rules and regulations that can be hard to maintain. On the other hand, some direct lenders may be lenient regarding your employment situation and may strive to provide unemployed consumers opportunities to get the cash they need.
Unsecured
Loans are unsecured loans, which means that borrowers can take out a loan without using an asset as security. In the case of secured loans, the lender can legally repossess the borrower’s assets if they fail to pay back the loan. However, with an unsecured loan, you are not putting your personal property at risk if you default on the loan
Disadvantages of Loans for Unemployed
Loans for the unemployed have their benefits. But you may want to consider the disadvantages too.
Higher Interest Rates
Online loans for unemployed carry higher interest rates because lenders see unemployed individuals as a greater risk and are concerned that they will default on the loan. Some lenders also charge additional fees such as origination fees, making borrowing more costly.
Penalty Fees
If you default on your loan, the lender will likely charge a penalty fee and even higher interest rates. As a result, you may end up with additional debt that you may struggle to repay. Moreover, defaulting on your loan will hurt your credit score, which may take time to fix.
Increased Debt Burden
If you already have other debt commitments, taking out another loan will increase your debt burden. Unless it is a true emergency, you may not want to take out another loan, no matter the amount.
More Paperwork
Lending companies often require less paperwork than traditional banks. However, unemployed borrowers may be asked to present more paperwork than employed borrowers to ensure they can afford to pay back the loan on time.
How Much Would You Like to Borrow?
Bad Credit Loans for Unemployed
When being approved for a loan, one of the primary factors is your credit score. Banks may rely upon your credit standing and past financial decisions to determine your loan eligibility. Another factor that banks consider is your employment status and how much you make. This can be a difficult point to fulfill if you are unemployed. Moreover, chances of approval are even lower for unemployed applicants with bad credit and, in most cases, can mean instant rejection.
The same is typically true for loans. You may be looking for no credit check loan providers, but that cannot be attained. Most lenders will perform credit checks and other evaluations, such as checking your employment status. However, they do not solely rely upon your credit score or employment status to complete their decisions.
With Quidable, you may connect with direct lenders in the U.K. that may offer loans for unemployed borrowers. People who do not have strong credit scores are still able to apply.
FAQ
Can I Get a Loan Without a Job?
Whether or not a person qualifies for a loan depends on more than their employment status. For example, some lenders complete affordability checks to assess if the borrower can afford the scheduled repayments and, based on that, either approve or reject applicants. Therefore, unemployed borrowers may qualify for a loan if they have a regular source of income.
How Much Can I Borrow?
The amount borrowed differs for every applicant based on their needs, circumstances, qualifications, and the lender. With that said, some lenders give loans from £50 to £5,000. The repayment period for short-term loans for unemployed individuals ranges from three to 36 months.
Are There Loans for Unemployed on Benefits Available?
Yes, you may apply for loans if you receive benefits. The benefit you receive is a regular source of income, which is one of the factors a lender considers during verification.
Can I Get a Loan if I Am Unemployed and Have Bad Credit?
Our partnered lenders may be willing to work with all credit types and lend a loan for bad credit. In addition, they may conduct alternative eligibility checks, including factoring in a steady income source like receiving government benefits.
Is a Guarantor Needed for an Unemployed Loan?
Having a guarantor may increase your chances of being accepted for personal loans for the unemployed. The guarantor can be anyone over 21, who has a good credit score and history and can afford the monthly payments. The borrower and the guarantor are legally liable for the loan. This means that the guarantor can be held responsible for the loan if the borrower defaults.
When Will I Receive the Loan Amount if Approved?
Depending on the loan company, you may receive the loan amount in as little as one business day. The lender will electronically transfer the funds to your bank account.
What Happens if I Fail to Repay My Loan on Time?
If you are unable to pay your loan on the due date, the lending company may offer to roll over your loan. However, if you still fail to make timely payments, the lender may send your account to a collection agency.