Nothing can be more stressful than being unemployed. You have to deal with several things and matters, including your bills, daily expenses and many more. Managing all this can be a back-breaking task when you do not have a reliable source of income.
For a moment, you might think of getting a loan in order to put your unstable financial life back on track. Wait! Here is the real deal – availing of a loan is relatively more complicated than you might have imagined in your dream.
Well, most street banks and other financial institutions provide loans to working people and have a steady source of income. Basically, this instils a feeling of trust in the lender that the borrower will most probably repay the amount within the time.
On the other hand, if you are unemployed, then there is a thin chance that the banks will trust you or consider you as a worthy borrower. They often see you as a risky borrower to fund. This is the reason why borrowing additional funds from mainstream lending institutions is not that easy.
Is there any possibility of getting loans for the unemployed?
By reading all these, a common query might pop up in your mind that: “Is it even possible to get a loan if I am unemployed? It would be good to hear that there are several ways to avail of a loan. Many lenders give certain types of loans made explicitly for people with no job in hand. We are talking about loans for the unemployed from a direct lender.
These loans are given at a high-interest rate and on a short-duration basis. Here, in this blog, we will be discussing different varieties of unemployment loans in detail so that you can go for any of them at your convenience. Now, let us get started.
Varieties of Loans for the Unemployed that you can consider
Here is the list of the different types of loans that you can apply for if you do not have a regular job:
- No Guarantor Loans: In this type of loan, you do not have to present a guarantor in front of the lender to get the loan that you have applied for. Not having a guarantor supporting you, keeping a good credit score or placing loan collateral can increase the chances of loan approval. Therefore, if you are somehow not able to repay the amount, your asset will work as the repayment mode to complete the debt. In order to get approval for loans without a guarantor, you need to qualify for the following criteria:
- The applicant’s age should be above 21 years.
- He/she must have a house owned by him/ her.
- The applicant must not be involved in any kind of IVA (Individual Voluntary Arrangement).
- A loan aspirant undergoing bankruptcy should not apply.
- Instant Cash Loans: Another type of loan that unemployed people can apply for is an instant cash loan or a doorstep loan. In this type of loan, the agent directly sends the amount to the borrowers’ house after they have qualified the criteria set by the lenders. Basically, a face-to-face interview is conducted to see the repayment potential of the borrower before the loan is given. In order to get approval for doorstep loans, you must qualify for the following criteria:
- Firstly, the age of the applicant must be at least 21. There are also many lenders who accept the borrower’s request only if he/she is 25 years or over old.
- Next, most of the lenders reject the loan request if the applicants live in a residence with a buzzer to get access.
- Long-term Loans: This is quite a popular type of loan where the borrower can get larger funding for a longer duration. However, they have to present an asset, also known as collateral, in front of the lender. This asset could be either your car, jewellery or house, and if you are unable to repay the loan, the asset that you staked will legally go into the hands of the lender. Therefore, make sure that you are ready to take the risk before applying for these long-term loans. In order to qualify for sorts of secured loans, you need to fulfil these requirements:
- The age of the borrower must be 18 or over.
- He/she must be a resident of the UK.
- The value of the asset given must be equal to or above the amount of the loan.
- Installment loans: These are basically short-term loans that can be borrowed when you want to meet your sudden financial requirements. Therefore, if you are unemployed but you do have a particular source of income, then you can apply for this loan. As this loan is given on a short-term basis, the amount is generally not very high, and the borrower has the liberty of repaying the amount in months. Most borrowers go for 12-month installment loans where they have an entire year to complete their debt. Now, let us have the features of this loan.
- Anyone with any credit score can apply
- Approval can come on part-time income or unemployment benefits
- Lenders treat your loan application with no or soft credit check
- Business Loans: Yes, you may be surprised to know that some lenders can offer business loans for unemployed people. Mostly, these belong to start-ups or home-based businesses. Therefore, you can see multiple deals are available on start-up business loans for bad credit and unemployed people. These loans are for smaller amounts and duration only, and you should look to them as to fill the funding gap only. Some attributes of these loans are:
- Loans are available in both secured and unsecured ways
- One can apply online with minimum paperwork
- Same day approval can be a possibility
Wrapping up, these are some of the best options for loans for the unemployed from a direct lender. Therefore, you can apply for any of them per your requirements. However, before applying for the loan, ensure you have learned everything and contacted the right lender.
Anna Johnson has more than 11 years of experience in direct lending industry of the UK. She is the Senior Content Editor at 24cashflow where she is leading a large team of loan experts. During her career, she has helped the loan aspirants to use the particular loans in the best way and improve their financial lives and status.
Anna Johnson is known for her in-depth research of the UK loan marketplace, as she has worked with many major lending firms in her career. During her educational phase, she has done a research on ‘Finance Fundamentals for Growing Business’.