Unemployment may create unnecessary financial strain. It prevents one from meeting basic living requirements. For example, it affects the ability to pay rent, utility payments, and fund emergencies. Most unemployed people lack sufficient financial capacity to pay for everything.
It is the reason they seek easy personal loans that may help them counter their needs. It helps them ease the financial pressure. However, getting one is difficult given the hand-to-mouth lifestyle. Every loan provider offers a loan to an individual who can afford the repayments. With no stable income to rely on, unemployed individuals face rejection.
So, is there no way to get a loan as an unemployed person? Well, there is hope at the end of the tunnel. You may get a loan despite a limited income. Want to know more about the options? Read ahead.
Can I get a loan without a stable job or while facing unemployment?
Yes, you may get a job despite being unemployed. However, the options may be limited. You must have a reliable part-time income that reveals your ability to afford the loan payments. Some loan providers may consider benefits as income.
However, most consider only a portion of the benefits as legal income. Thus, having additional and verified income may help. It could be in the form of – rental income, gig income, pension income, Universal Credit, etc.
What loans can I be eligible for as an unemployed person?
Here are some loans for the unemployed to get from a direct lender online. Identify the purpose, loan type and amount requirements before getting a loan. Determine the eligibility criteria.
1) Guarantor loans
A guarantor loan is a type of finance that involves a person who acts as security for the loan. They provide the strength of the credit and income to get a loan. It helps you get a loan at a low interest rate with immediate approval. Anyone with whom you share a close bond can be a guarantor. You should be sure of committing to a long-term loan with that person.
2) Secured loans
Secured loans are ideal for homeowners with sufficient equity in the property. The asset acts as collateral for the loan. It implies that the loan provider may claim the asset if you fail to repay the loan.
It helps you get the loan at low interest rates and better terms. You may get a high amount compared to what you may get if you applied for an unsecured loan. It is ideal if you need an amount over £5000 for your needs.
3) Personal loans for benefits
Yes, you may get a loan for benefits income. However, these loans may be ideal only for emergencies. If you have benefits like unemployment benefits, Jobseekers allowance, child care benefit, etc., you may get a loan.
The amount you may get remains £1500 for basic needs. You must have a valid benefits income slip to get a loan. It reveals that you receive the payments from the government. However, as mentioned above, having a part-time income may help you get instant approval. Therefore, try to provide additional income proof if the provider doubts your affordability.
4) Short-term emergency loans
Instant cash loans or emergency loans are ideal to meet urgent cash requirements. It helps you get a loan without collateral or a guarantor. Instead, the approval is based on your affordability. If you can afford the loan, you may qualify. The repayment term stays low on these loans. You can repay the dues within 12 months.
5) Bad credit loans
Unemployed individuals generally have a bad credit score. It is ideal if you struggle to qualify with traditional means. You may get a loan of up to £25000 for your needs. However, you may get one according to what you can afford to repay.
The interest rates on these loans stay competitive. However, getting one with a guarantor may help you. You may get a loan quickly and at better interest rates. It reduces the overall loan costs.
What eligibility criteria do I need to pass to get an unemployed loan?
Unemployed individuals in the UK are eligible for a loan if they have a part-time income. It could be from sources like benefits, pensions, gig work, etc. Your benefits plus the part-time income must be higher than the monthly expenses. Here is the general criteria to get a loan as a jobless person:
ÄIf you are a regular citizen of the UK
ÄYou have a basic or part-time income
ÄYou have relevant proof of the benefits that you receive
ÄYou must have a relevant bank account with direct debit
ÄYour credit utilisation ratio must be less than 30%
ÄYou should be on the electoral roll
ÄYou should have a valid and stable rental address.
a) Myth 1- “You can’t get a loan without a job”
No, you may get a loan without a job if you are receiving benefits or have a part-time income.
b) Myth 2- “Applying for a loan will always harm your credit score”
No, applying for a short-term loan will not affect your credit score. It is because most loan providers conduct only soft credit checks that do not show on the credit report. However, avoid making multiple loan applications.
c) Myth 3- “Unemployment means automatic rejection”
Not true. Affordability and responsible borrowing matter the most when getting a loan. Employment status alone does not define the loan approval.
Tips for Borrowing Responsibly During Unemployment
You should be careful while borrowing as an unemployed person. Here are some tips that might help:
a. Calculate a realistic budget
Identify how much you can afford to repay on the loan. Calculate your monthly income and bills. It will help you borrow a realistic amount that does not burden your finances. Knowing it before applying for the loan helps you.
b. Check your credit score
Identifying and checking your credit score may help you borrow responsibly. Identify and settle the delinquencies if seeking direct lenders for bad credit in the UK. Determine the bills that you can pay before borrowing. You can also consolidate if you cannot pay directly. It will help you save money and boost your credit score.
c. Avoid multiple loan applications
Try to avoid making multiple applications at a time. It affects your credibility and chances of loan approval. Instead, compare the APR and interest rates. Check the total costs and apply for the one that’s the lowest and suits your budget and salary lifestyle well.
d. Prioritise only essential expenses
It is important to keep your expenses low while taking a loan. Otherwise, it affects your affordability andability to repay the loan. Focus on rental, utility, groceries, medicine, and other expenses. Avoid spending on new clothes, OTT platforms and other expenses.
Bottom line
Yes, you may get a loan as an unemployed person. Identify the loan eligibility requirements, affordability and amount you may get. You can use a loan calculator to know the approximate amount. It prevents you from borrowing a higher amount unnecessarily. Thus, identify your requirements and understand the costs and risks involved. It will help you borrow right.
