Under unemployment, an individual suffers the worst phase of life. From managing regular expenses to paying debts, one hardly saves. The margin is grim. To extend this, one needs access to a little extra cash. To keep your head above water until you grab a job again, short-term unsecured loans work the best.
The blog discusses how an unemployed individual can qualify for unsecured loans.
What do Unsecured loans imply?
An unsecured loan is an offering where you do not need to put up collateral or asset to get the loan. In precise, to get the loan, you will need to provide a stellar credit score and affordability proof. You can use these loans for any purpose like- fixing a burner, replacing a tire, managing stationery expenses, and medical expenses. Etc.
These loans have competitive interest rates. However, in comparison to secured loans, you do not share any fear of losing the asset on non-repayment. Some lenders demand personal security on unsecured loans with bad credit profiles.
How to Choose an unsecured loan?
While taking an unsecured loan for your requirement, you must decide on the right type of loan. These loans are readily available to everyone. Here lenders prioritize income over credit score to provide loans.
So, anyone – students, single mothers, professionals, self-employed, and retired individuals. The costs of loans and interest rates differ from lender to lender.
Before taking loans for the unemployed in the UK, evaluate the purpose. Lenders share a high risk of individuals defaulting on these loans; hence they have high-interest rates. Thus, evaluate your external sources like dividends, retirement fund, and spouse income before applying for the loan. Check eligibility before applying for the loan. It will help you gain an idea of which loans you may qualify for. Checking eligibility would not impact the credit score.
Can one get loans for the unemployed on benefits?
Unemployment benefits are also known as unemployed compensation and payment. These payments are made by authorized bodies or the government of the UK to unemployed individuals. The sum covers only minimum survival requirements.
These are provided to those who become unemployed with no fault of their own. The primary criteria for qualifying for these grants are – the applier’s unemployment history and the reason behind unemployment. Once approved, the individual has to wait a while to receive the amount.
Many lenders consider individuals with unemployment benefits as a source of repayment. If you are tired of facing rejections and have only income with unemployed as an income source, then you can apply with us. Emergencies can strike any hour on the clock. In this case, a small loan might be the answer to your needs.
Before filing up the form, check out your friends, family, and neighbors for help. Tap into your existing savings if any. Do not tap into an emergency fund for meager money needs. An emergency fund is ideal to have in advance. It helps in avoiding troubles, especially in unexpected phrases like these.
What Is the Eligibility Requirement To Qualify For The Loan?
The requirements for an unsecured loan with bad credit depend on how much you wish to borrow and the timeline. Check the criteria before applying. Here are the criteria:
1) Age
You need to be 18 and above to apply for the loan. Some lenders also have an upper limit, typically 70-75.
2) Residency
You should be a UK resident. If you have been living in the country for 3 years and hold a valid account. If you are a non-resident, you may also get a short-term unsecured loan. However, the terms and conditions apply the same.
3) Income requirement
While you may not need to be regularly employed, you still need an income source to qualify for the loan. It is to ensure credibility over-payments. Thus, you can reveal any sort of payment to get the loan. The income proof can be anything from:
- Income from a retirement fund
- Income from the emergency fund
- Spouses’ income source
- Emergency account income
- Income from self-employed
- Income from dividend
- Income from benefits
If you can reveal any of these as proof of repayment, you may qualify for the loans for the unemployed in the UK.
How To Increase Your Chances of Approval?
Here are some ways you can improve your chances of loan approval when unemployed:
- You may consider applying with a friend, co-worker, or family member
- Many lenders offer the option of joint application
- Many lenders require a guarantor on loans in some conditions.
- If you are unemployed but need a grand loan amount, you can consider a secured loan. By putting up collateral, you may improve your credit score. The asset decreases the risk associated with the loan, hence increasing the loan approval chances.
- Apply for a comparatively low amount
Do You Need a Guarantor To Get A Loan While Unemployed?
No, a guarantor is only required if you wish to borrow a higher loan amount at less-than-ideal credit. It is done to ensure security over loans.
A guarantor is someone whom you know dearly. He can be anyone from- a brother, mother, father, or grandfather. Friends cannot be legally treated as a guarantor on loan. To qualify for a larger amount, the guarantor’s credit score must be good. Lenders consider the credit score of both borrower and the guarantor to provide the loan to the borrower.
The guarantor, by applying to agree to the agreement, becomes liable to manage repayments if the borrower defaults. He will be responsible for paying the remaining amount to the lender. Yes, many times, the guarantor escapes the agreement. Therefore, choose the right person whom you trust completely. As it is a high-interest loan, non-repayment may hurt the credit score of the borrower.
What Loans You May Qualify for Easily in Unemployment?
There are different loans you may qualify for in unemployment. These loans do not require a stellar credit score:
- Payday loans
- Doorstep loans
- No credit check loans
- Instant cash loans
- People on benefits loans
Bottom line:
Thus, if you are seeking immediate money assistance for your needs, you can easily get a loan. Reveal a minimal income proof for loan and qualify. Unemployment can be scary, but you do share options. These loans for the unemployed individuals options are ideal to attend to emergencies and survival in the UK.
