Getting an unemployed loan can’t get simpler: The guide

Applying for a loan as an unemployed requires careful consideration. It implies knowing the eligibility criteria, your affordability and loan purpose well. You generally need a verified and consistent income source to qualify. Which, as a jobless person, you lack. So, does it imply you cannot get a loan unless you get regular employment? No, you may still get one. However, the terms and interest stay a little competitive.

Mere negligence may affect your monthly payments. It may also lead to a loan default. Therefore, you must analyse your requirements and loan well before applying. If you are applying for a loan for the first time and are unemployed, the blog may help. The commonly asked queries may help eliminate any confusion.

What should you consider before getting an unemployed loan?

You may be unemployed due to a variety of reasons. It could be health, accidents or economic job loss. Not having a regular income is indeed problematic. Moreover, the debt pile won’t ease just because you cannot repay them now. Instead, it continues to increase, leading to increased interest rates and penalties.

However, using an unemployed loan in a timely may prevent that. You can use it to repay the dues before the deadline. For that, you must ensure that you are regular with the payments. Don’t apply unless you are confident you can repay the dues. Otherwise, you may add up another debt to your purse.

Here are other considerations to check before applying for the loan:

How likely are you to get a loan if unemployed?

Qualifying for loans for the unemployed person requires one to meet the basic affordability criteria. Your credit score, finances, income, and credit availability decide the approval chances. Credit availability is the credit limit up to which you can borrow. Individuals with lower credit limits struggle to qualify.

Undeniably, getting a loan without a consistent income is challenging. Therefore, you must provide verified part-time income that meets the criteria. Individuals with low liabilities, verified secondary income and authentic history get instant approval. To learn more about your options, contact moneyhelper.org.uk experts.

What aspects may get you immediate approval?

Your income matters the most over your credit score. Try to improve it by adding more jobs to your part-time earning lifestyle. If possible, explore the possibilities of getting a full-time job. You may even get a loan on a recent job offer letter. Alternatively, improve the following aspects before applying:

• Update your electoral roll details
• Check the possibilities of getting a guarantor or a third-person
• Apply for a limited amount than what you need
• Check the possibility of paying off some small bills
• Provide verified proof of address, earnings, and citizenship
• Avoid any spelling or grammatical errors while filing the application form

Can you get a loan without a credit history or bank account?

Yes, you may get a loan without a detailed credit history and even a bank account. However, you may get a lower amount. Such loans are popularly known as home collection loans. Under this, the lender’s representative provides the loan at the borrower’s home/office. You can repay the amount the same way.

The loan is ideal for students with part-time income needing urgent cash. You must provide proof of income to qualify. Alternatively, individuals lacking an earning source must provide a guarantor to qualify.

How to fetch cheaper interest rates despite being jobless?

Yes, you can decrease interest liabilities significantly despite being unemployed. Certain aspects, like providing a guarantor, may help. A guarantor is someone whom you can trust with your financial decisions. He could be your father, mother, siblings, or grandparents. His definite credit and income profile may help you get low interest rates on the loan. Here are other ways to fetch an unemployed loan at affordable rates:

• Get a secured loan by providing an asset
• Choose a smaller loan repayment term (it should not affect your monthly instalments)
• Apply for a lower amount
• Co-sign the loan agreement with your partner or siblings.

Note: Getting a loan with a co-signer is different than a guarantor. With a co-signer, you are equally responsible for the payments. The co-signer may help split the loan costs. The person’s finances reduce the overall interest obligations. It thus makes the loan affordable.

Which aspects may increase total loan costs (including interest)?

Yes, certain aspects may increase the total loan dues. It could prove troublesome for individuals with low income and multiple liabilities. You may fall on repayments or enter default. Thus, skipping a payment may increase the interest cost on a loan. Here are other aspects that may up your total amount to pay:

• Shifting the monthly payment to another month (debt rollovers)
• Drop in your basic monthly income
• Sudden economic shifts leading to hikes in interest rates (variable loans)
• The guarantor leaves the agreement mid-way
• Low credit utilisation rate, applying for new loans/credit cards, or using overdrafts

What to do if you fall on loan payments and cannot pay?

Contact your loan provider and seek personalised guidance. Tell him about your current financial circumstances and the amount you can afford to pay. Inform about the reason behind missed payments or non-repayment. This may help the creditor suggest a personalised loan repayment aspect. It may ease the trouble for you. Reach out as soon as you encounter trouble paying the dues.

You must consider the worst before taking any loan. You may struggle to carry the loan payments due to a change in income or physical health. It is hard to pay if an urgent emergency falls in your lane.

The inability to repay the dues may increase financial strain. It may affect your home and monetary lifestyle. Understand the best ways to settle small but costly debts.

Alternatively, aspects like setting direct debits and paying the bare minimum on loan payments may help. You can also consider halting your payments by requesting a payment holiday. However, the interest continues to grow.

Is it impossible to get a loan without a credit check?

Yes, you may not get a loan without basic credit checks. It is the primary part of the loan approval process. It helps the loan provider and the borrower understand the basic affordability.

The loan provider only checks some general aspects like- income, debts, contact number, address history, and requirements during the credit check.  It does not affect your credit score. Instead, it helps you and the provider know how much you can afford to repay comfortably.

Thus, always explore direct loan lenders providing no credit check loans for the unemployed. It prevents you from borrowing unnecessarily high amounts for your needs.  You can get a quote that may tell you the approximate costs. You can decide accordingly to it.

Is a loan the best option for the unemployed?

No, a loan is not always the best option for a jobless person. One should only check it in extreme financial distress. It is ideal for individuals lacking basic savings, regular income, or any income from passive earning sources like dividends. It may be helpful if you solely depend on government benefits for the unemployed to survive. The loan may then help you meet emergency needs with instant cash assistance.

Moreover, read the loan terms carefully before signing off. Don’t skip the lines in small letters and asterisk. It may help you avoid surprises along the way.

Bottom line

These are some of the important things to know before applying for a loan as an unemployed. Check your amount requirement after detailed consideration. Analyse your savings or other possibilities to get cash before resorting to unemployed loans. Yes, it should be your last resort. Analyse the amount you can afford by using a loan calculator. Borrow a lower amount to get instant approval and avoid paying interest unnecessarily.