Loans are available to a group of people when they are even unemployed. Our article gives details of how it’s possible to get a loan when you are out of a job. Employment history is one of the factors considered by many lenders in reviewing borrower loan application. They try to determine how you are likely to repay the loan acquired.
Many individuals who are workless struggle due to financial crisis and therefore try to rely on loan for survival. This is because there would be emergency situations where you will have to pay for medical or home bills. On certain occasions too, such individual might need that loan to enter into entrepreneurship. This is very risky though since you do not have any job or source of income in making repayment on time which can affect you if you are unable to make payment.
How it works
Acquiring a loan when you are unemployed is not as easy as when you are working or have a source of income. Most lenders are concerned about you repaying your loan hence they tend to consider your employment history and income details. This means that the chance of gaining a loan while you are out of work is on the low.
This is also not to say that there aren’t lenders who provide loans to unemployed people, there are. The common ways to get a loan when you are unemployed is when you have an asset (home or car) or savings, when you are on a pension or enjoy regular State benefits and with a good credit status.
These forms of loans for unemployed people are likely to be high in terms of the interest rate and other fees which apply. You can get a secured loan with collateral as a security (this could be in the form of a home or car).
Getting a personal loan when you are unemployed
Lenders who consider unemployment people and grant them personal loans review certain factors about their borrowers before. This is to explain that, you must qualify for this form of loan through certain requirements apart from you being unemployed. These include;
- Credit Score
- Unemployment benefits
- Social Security
- Rental Income
- Child Aid
- Disability Payment
- Regular payments from settlement
Sources where you can get loans when unemployed
When individuals are employed, they can apply for loan through their retirement or investment account that is if they have one. They can contact their account manager to find out more on that, whether they are eligible to be granted a loan.
You can also ask for loans from family and friends, thus one of the simplest and easiest forms to gain a loan when employed.
Types of loans to access when unemployed people
Due to your unemployment status, you won’t be able to get a good range of loans available to you. There will be limited loan types with high interest rate.
Secured loans – To access this form of loan, you will need to provide collateral as security. This could be in a form of property; a house or car. Failure to repay your loan will mean that, the lender will take control of that particular asset till you are able to complete the payment. These include auto loans, payday loans, doorstep loans, etc.
Unsecured personal loans – This type of loan doesn’t require any asset or collateral to access a loan, with a good credit score, you are good to go.
Guarantor loan – With this, you will be required to provide a guarantor like a co-signer who will be held responsible if you fail to make repayment on your loan. In the loan contract, it’s always stated that the guarantor pays the debt when the borrower fails.
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