Loans for Unemployed People
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In general, many lenders are hesitant to approve loans for jobless people. On the contrary, impossible as it may seem, you’ll find many lenders offering unemployed loans.
Yes, it’s true that if you are unemployed, it can be difficult to obtain a loan. Obviously, loans require you a repayment plan that includes interest and other fees, if any. This makes it important for you to have some kind of income.
It’s a huge risk on both you and lender to take out a loan when you’re unemployed. Lenders are aware of this. That’s why if they will offer you a loan, then it will have a higher interest and stricter terms than regular loans.
But, if you really need a loan, then it would be wise that you educate yourself with what’s potentially available on the market that suits your circumstances. You also need to understand the risks involved in getting unemployed loans.
Lenders will always check your credit report each time you apply for a loan. Your credit rating is the most priority factor that lenders use to decide whether to offer you a loan or not. That is why it is important that you check your financial history first before you apply for any other type of credit, especially if you are unemployed or do not have a stable income.
Qualifying for Unemployed Loans
There are lenders who will consider you for a loan even when you are currently unemployed. However, you’ll need to be earning some form of income or have suitable income-earning assets that will support your capability to repay the loan. Whether you are receiving benefits, welfare payments, being self-employed or receiving a regular deposit into your account from investments, all of these will be considered.
Lenders will often ask access to your banking history and financial documents for verification purposes. Along with this, you’ll need to meet the basic requirements. You must be a UK resident and over 18 years old.
Unemployed Loans and Your Options
Okay, so let’s face it. With no stable source of income, your eligibility for loan is at the least. Lenders would not be willing to offer you a loan until you prove you can afford to pay it back. Without a regular job, this might be very challenging for you. You need to look for other sources of income to show that you have sufficient funds to make the loan repayment.
The first thing you should do is to apply for unemployment benefits for job seeker. Depending on your age, savings, and income, the UK administration will determine the benefit check. The, you wait for 15 to 20 days to receive your first benefit check in the bank account. This would add some creditworthiness to your loan application.
Add additional income sources too, no matter how small. You may have income on your personal blog or have any other recurring income source such as commission, pension or goodwill check. Include all of these in your loan application.
Your assets including your home equity and car ownership would also help you get eligibility of the loan. Credit history is important, but when you have bad history, you need to look for no credit check loans. However, this would not be easy and safe to obtain and would come at a very high cost.
- Cash advances as unemployed loans
If you are receiving a benefits check, you are eligible to apply for instant cash loans such as payday loans. Unemployed loans in a form of payday loans can help you get instant access to the loan amount you need.
However, payday loans are short-term, which you need to repay in two to four weeks or once your check arrives. With no source of income, the strict repayment deadline that payday loans have could be too stressful for you. Usually what happens is that you will have to reapply again, and again. The cost of rolling over payday loans is very high since they come with very high interest rate.
- Doorstep loans as unemployed loans
Alternately, doorstep loans can also qualify as unemployed loans. They are generally provided without credit check. The loan term of doorstep loans are longer than that of payday loans. These loans also offer better ease of repayment in the form of weekly instalments. However, these too are expensive loans, and thus must be used for emergency expenses only.
- Instalment loans as unemployed loans
To better manage your day-to-day expenses, you might want to take out instalment loans that are payable over a couple of months or more. You’ll find many short-term unemployed loans that offer a more flexible loan terms. These loans can either be secured or unsecured.
- Guarantor loans as unemployed loans
Guarantor loans are a great option as well when you are unemployed. If you have a friend or family member who is willing to support your loan application, you can get the amount you need. The guarantor must have good credit or a homeowner. His or her responsibility is to pay the loan for you in case you can no longer do so yourself.
You can still get a loan even when you’re unemployed, but it is more difficult and potentially much more costly. Therefore, the risk is higher. With no stable income, and bills and basic expenses are at your tail each month, you can be in a train wreck in no time.
However, you have many ways to have access to the money you need. You can add other forms of income you have no matter how small it is. You can apply for benefit checks, payday loans, doorstep loans, instalment loans with longer loan terms, guarantor loans, secured loans, and more.
Unemployed loans exist to help you get through emergency or intermediate financial obligations, and not for long-term expenses. As soon as you would find a new job, pay off your loan, so you can get back on your feet. Work on your credit score, so you can get cheaper loans in the future.
305.9% APR. £400 borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly instalments of £187.31.
Interest charged is £161.92, interest rate 161.9% (variable)
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Rates from 45.3% APR to 1575% APR – we provide a no obligation quote, your APR will be based on your personal circumstances