Unemployment is one of the most financially sensitive periods. The uncertainty associated with carrying out basic expenses lingers and affects mental peace. In this condition, missing a loan payment or a financial emergency can lead to a panic-like situation. Here, one explores the best ways to pay for it using dividends, savings, and other basic aspects.
Unemployment is one of the most financially sensitive periods. The uncertainty associated with carrying out basic expenses lingers and affects mental peace. In this condition, missing a loan payment or a financial emergency can lead to a panic-like situation. Here, one explores the best ways to pay for it using dividends, savings, and other basic aspects.
Loan options and risks for the unemployed in the UK explai
Unemployment is one of the most financially sensitive periods. The uncertainty associated with carrying out basic expenses lingers and affects mental peace. In this condition, missing a loan payment or a financial emergency can lead to a panic-like situation. Here, one explores the best ways to pay for it using dividends, savings, and other basic aspects.
However, what if you lack enough savings? What if part-time payouts get delayed? Here, you need to have a hand over the popular loan options that you may consider. The blog discusses these in detail, along with the risks associated with that.
Who may qualify for a loan as an unemployed person?
You may get a loan as an unemployed person if you meet the basic criteria:
1. You must be a UK-based citizen with a citizenship
2. You should have been living in the country for over 3 years
3. Must have a valid bank account with a direct debit facility
4. Should have an authentic income – part-time/gigs/self-employed/rental
5. Must have a consistent residential address
6. Should have a valid passport/bank statements/residential proof
Why you may need a loan as an unemployed?
You may need a loan to counter the financial inconsistencies as an unemployed. Here are some conditions in which the loans may help:
1. To counter an unexpected payment
2. To pay for the rent, medicines, and other essential expenses
3. Bridge a payment to an important bill or a home repair
4. To meet needs before you get the part-time pay
5. Get cash without affecting the credit score at the time of the loan application
What loan options can you tap as a jobless person?
Now let’s analyse the loan types that you may consider as an unemployed person. The requirements and eligibility criteria may vary slightly according to the specific loan product.
Guarantor loans
It is a loan that one can consider if he needs a high loan amount and have someone to provide the repayment guarantee. It is known as a guarantor who provides the strength of the credit score and income to help the primary borrower qualify and fetch better terms.
Both the primary borrower and the guarantor are responsible for paying the loan. You may get a guarantor loan with no credit check facility that does not affect your credit score. It is a quote that you get immediately after you apply for the loan. A guarantor should be a UK resident with a valid address proof. You may get £1000-£25000 on the loan with a guarantor.
Risk: If a guarantor steps out, you will be responsible for the payments.
Instant cash loans
These are the loans which individuals may get in real time. It is ideal to get cash for emergency or short-term purposes. It does not require a detailed credit check, documentation, or loan processing. Instead, one may qualify for these loans by proving the affordability of the loan. Individuals with a basic income and living on unemployment benefits may also qualify for the loan.
The amount you get here remains 5000 pounds for basic expenses. You can repay the dues in weekly or monthly repayments within 6-12 months. If you struggle with the loan payments, consult the creditor early. It may help you get a suitable solution to your financial issues and repayment-related problems.
Representative example:
For example, if you need £3000 urgently to deal with a leaking pipeline, you consider a loan. You borrow £3000 for 12 months at an interest rate of 14.5%. Your monthly instalment is £269, you pay £226 in interest and £3,226 in total on the loan.
Risk: Skipping loan payments may lead to high interest and penalties. It may affect finances even more.
Home collection loans
As the name suggests, these loans are loans which you can get at your doorstep. The loan representative provides and collects the monthly instalments from the doors themselves. You don’t need to go anywhere if you need cash urgently. Any individual lacking a bank account or a credit score may also get the loan.
It is because the primary aspect to qualify for these loans is the affordability. You must be able to afford to repay the amount that you borrow. You may get up to 3000 pounds with a repayment period of 3-12 months. You can repay in monthly/weekly/fortnightly instalments.
Risk : The ease of loan approval leads to getting habitual to applying for doorstep loans. It may lead to rollovers.
Loans for the unemployed
As the name suggests, these loans are specifically for individuals with no fixed income. You may qualify if you are actively seeking work for at least 4 weeks or working less than 16 hours per week. You may qualify for the loan as an unemployed person if you earn less than £952.38 per month in the UK.
Loans for the unemployed help you finance any personal cash requirements of up to 10000 pounds. You can carry out basic home repairs, pay bills, attend to child maintenance costs, etc. You don’t need a guarantor or collateral if you want to borrow until than specific amount.
Alternatively, if you need an amount higher than £10000, you must provide a loan guarantor. If you wonder what income proofs may qualify you to get a loan as an unemployed, read ahead. You may get a loan with :
1. A part-time income
2. Income from government benefits
3. Rental income
4. Income from investments
5. Self-employed income
Risk: You may end up paying more in interest if you choose a longer repayment term.
Bad credit loans
These loans are for individuals with credit issues like missed payments, CCJ, bankruptcy, penalties, etc. Getting a loan with such issues is challenging in the UK. It reveals the profile as highly risky and unreliable from the repayment perspective. However, some loan providers consider such profiles and help provide loans to meet basic personal needs.
Unemployment affects a person's credit score of a person drastically. It is due to the low potential of repaying the debts. However, you may still qualify for bad credit loans if you can afford the loan payments. Always borrow only an amount that you can comfortably repay, given your income and basic essential expenses and bills.
The interest rates stay competitive on these loans. You can ease it up by applying with collateral or a guarantor. However, don’t provide one until asked. The maximum amount you can get on the loan is 10000 pounds, and 1000 the minimum. You can use the loan to consolidate debts, pay rent, buy a car, find a job, etc.
Risk: Not comparing the APR and interest or checking hidden costs may increase the total loan liabilities.
Short-term loans
You may qualify for loans for small-term needs online. You may get up to £3000 to meet the specific requirements. The loan approval criteria remain almost the same, just like other personal loans. However, you should be conscious about borrowing money as the interest rates are high.
These loans are usually repaid in fixed monthly instalments. You can use the loan for treating the short-circuit, urgent bill payments, groceries, vet bills, etc. It could be something that you cannot delay until another day.
Risk: Always check cheaper options to meet needs first. Short-term loans are helpful, but high interest rates may affect necessities for the unemployed.
Bottom line
Thus, getting a loan as an unemployed person is not impossible. It just requires you to understand the loan options available and choose the right one. Understand the aspects that the loan may help you with. Check the APR, interest rates and total loan repayable amount before consenting to the loan application.
Watch out for the hidden loan fees that may increase the overall costs. Also, determine the possibilities of flexible repayment terms and the possibility of paying early without penalties. It may help you manage the loan better.
Tags : loans for the unemployed
