Just like the employed, the unemployed too can find themselves in need of a loan. For many, seeking a loan in case of a financial problem is usually the last solution simply because loans for the unemployed are rarely available.
Most lenders are unwilling to offer loans to unemployed people because of a lack of security. To the borrower, it also poses a risk since they may not have a reliable source of income which translates to chances of failing to repay a loan.
Loans for unemployed are, however, available although limited. Although many lenders won’t advance a loan if you’re unemployed, there are those who will provided you meet the minimum requirements and prove your ability to repay the loan. However, there are basic things that can improve your eligibility.
Can I Get a Loan If I’m Unemployed or on Benefits?
Getting a loan on benefits or being unemployed is possible although you may be required to provide a lot of information that would otherwise not have been asked for. In the UK, lenders approved by the Financial Conduct Authority (FCA) are most likely going to deny you a loan if you’re unemployed.
There are, however, other lenders who can approve a loan for you provided you meet their minimum requirements. If you have secured loans in the past, it’s good to ensure your credit score is appealing to lenders.
Some of the possible benefits that can convince lenders to advance you a loan include; social security benefits, veterans benefits, recurring dividend payments, retirement benefit payments and more.
If you’re confident that your benefits can help repay the loan within the agreed period then you can make an application via UKBadCrediLoans. You may also need to try several lenders in case the initial application doesn't succeed.
|How much can I apply for?||£100 to £5,000||Zero-obligation quote|
|Length of the repayment||1-36 months||Quick payout|
|Interest rates (variable)||49.7%||Zero paperwork|
|Can I apply with poor credit standing?||Yes||Bad/low credit considered|
|Do I have to pay a lump sum?||No||Flexible repayment|
|When am I allowed to apply?||24/7||2-min simple application|
Why Should I Get a Loan When I’m Unemployed with Bad Credit?
Getting a loan when employed or unemployed usually serves the same purpose—covering emergency expenses. No one is immune to encountering financial hurdles (whether employed or not). So, provided you find yourself needing emergency loans to back you up, unemployed loans are for you.
However, just because loans for the unemployed are available doesn't mean you should always apply for one. Only consider unemployed loans if you know you have the ability to repay.
Types of Loans Available for Unemployment
Secured loans: In case you’re unemployed but are owning an asset such as a house or a car, secured loans could be a feasible option for you. Here, lenders use your asset as loan security. If you fail to repay the loan, the lender reserves the right to repossess the asset. Secured loans usually come with low interest compared to other bad credit loans.
Guarantor loans: Guaranteed loan requires the borrower to have someone else co-sign the loan where both parties become legally liable for the loan. In case of failure to repay, the guarantor will be held accountable.
Personal loans: If you’re on benefits, some lenders in the UK can accept to advance you a personal loan. Due to the high risk accompanied by personal loans, however, interests may be high with low borrowing amounts.
Doorstep loans: These are traditional loans where lenders send an agent to visit you in person. Once they assess your application and approve it, the agent will bring the money to your doorstep. Payments shall also be collected at your doorstep. Due to their nature, doorstep loans are of small sizes and might come with high interest.
Get your quote for free!Start Now
Advantages of Getting Loans for Unemployed
- Unlike saving, a loan would give you instant money that you otherwise could not have gotten somewhere else.
- Managing to repay your loan within the agreed period means you boost your credit score. As such, you boost the chances of qualifying for more loans from different lenders in the future.
- Getting a loan if you’re unemployed can also help cover unexpected expenses such as repairs, medical bills and more.
Disadvantages of Getting Loans for Unemployed
- Getting a loan for the unemployed is accompanied by the risk of failure to repay the loan. If it happens, you risk getting into a bad relationship with the lender. Failing to pay in time also damages your overall financial profile such as lowering your credit score. This can affect you even in the future.
- A loan for the unemployed also piles up your debt. If this is accompanied by existing debts, it becomes stressful.
- Loans for the unemployed also come with high interest rates. This also translates to increased chances of defaulting the loan.
Will a Guarantor be Needed for an Unemployed Loan?
Not always. Some lenders would require a guarantor to co-sign the application. Lenders do this as a way of adding security in case you default. Since companies have different requirements, however, a guarantor may not be needed.
If you have a guarantor and want them to co-sign your loan, you may have to search and find a lender who accepts a guarantor. As a broker, we can help you find the best lender who matches your needs from the large pool of unemployed loan lenders.
As stated earlier, having benefits in place can boost your eligibility significantly.
Alternatives to Unemployed Loans
Here are some alternatives you can always go for in case you fail to find a lender for an unemployed loan.
Credit cards: Some credit cards let users take a cash advance. This is a type of loan borrowed against the available credit card balance. Some credit card companies, however, offer these loans on interests that may be expensive.
Secured loan: If you have an asset that can be used by lenders as collateral, consider going for a secured loan
Securing a loan for the unemployed can be tough and alternatives are always limited as well. In case you find yourself struggling with debt or having problems managing debts, consider seeking help from relevant sources.
Loans for unemployed are limited. To position yourself as eligible, you need to work on strengthening your financial history as much as possible. Besides, it’s always a good idea to build good relationships with people who can be your guarantor.
It can also be agitating if you can't seem to secure a loan after trying multiple times from different lenders. Trying to figure out everything by yourself can be tough. We are a broker and can help you with the initial daunting task by connecting you with reputable lenders who can agree to advance you a loan.
Although we can’t guarantee you success since it all depends on your financial profile and the lender’s eligibility criteria, we can help improve your success rate.