After losing a job, it becomes complicated to manage all regular expenses, especially if you do not have emergency corpus. Further, you do not know how long it can take to land you a new job. This is what adds up your anxiety. Having an emergency cushion can help you tide over when you are out of work, but this may not be enough to fulfil all your needs. What if you come up with an emergency?
Although there are various online lenders to lend you money, they may not sign off on your application when you are jobless. Having an income source is crucial to prove your affordability to the lender. Some lenders do not lend money to the unemployed while others can do so. However, you will need to prove your repaying capacity to get approval for the loan.
When you lose your job, you can apply for unemployment benefits that work as your income to pay off the debt. When you have lost your job and need money urgently, you can apply for short-term loans for the unemployed provided you have enough money to pay off the debt.
However, there are circumstances when you can fail to apply for these loans. What are the alternatives then? Before you know the answer to this question, you should know:
Just because there are a few direct lenders for unemployed loans does not mean that you should apply for such loans. First off, you should find out if it is urgent. For example, if you borrow money to buy something that is not urgent, you are making a mistake. Since you can put off your purchase, this is not an excellent idea of borrowing money.
Further, you should check your affordability. Note that you are to pay the interest along with what you owe, and if you fail to make the repayment, you will end up rolling over the loan and eventually fall into a debt trap.
Do not make guesswork. Instead, you should create a budget to know how much money you need to spend. Do you have enough money left after meeting all your regular expenses to pay down the debt? Get the estimate of the total cost of the loan and see if your budget allows you to do so. If you are sceptical about your repayment, you should not take out these loans. There are various other alternatives you can use to fund your needs.
Since loans for unemployed carry high-interest rate, it is crucial to choose a loan deal that fits your budget. Guaranteed unemployed loans mitigate the risk of the lender and therefore, they come with lower interest rates.
You will have to arrange a guarantor who will be liable to pay off the debt if you fail. Your friend, spouse or any other family member can act as a guarantor.
You might be amazed to know that you can apply for a credit card even if you are out of work. Although it can be slightly tricky, it is not impossible at all. As long as you have evidence to prove access to income, you can easily qualify for it.
You do not need to have a full-time job or a business. If you have income from a part-time job, freelancing or a rental property, you can apply for unemployed credit cards.
There are chances that you may not be able to qualify for credit cards for unemployed. In that case, you have an option of applying for a secured credit card. As the name suggests, these credit cards require collateral.
The limit of the credit card will be determined based on the amount of collateral you deposit. For instance, if you have a fixed deposit, you can use it as collateral for a secured credit card. Once you close the account or switch to a standard credit card, you can get back your security.
If neither of the options seems to be possible for you, you can apply for secured unemployed loans. You will have to put down collateral to get these loans. These loans carry lower interest rates than standard loans for unemployed.
This is because it mitigates the risk of the lender. If you fail to pay off the debt, the lender will liquidate the collateral to get money back. Note that you will get the amount of money based on the value of your collateral.
However, it does not mean that the lender will not check your affordability otherwise. Even though they are secured, you will get a small amount of money.
If you are unemployed, you can take out a loan. However, you will have to prove your affordability. If you are unable to have these loans signed off on, you should consider other financing options. These include secured unemployed loans, credit cards for unemployed, secured credit cards, and guaranteed unemployed loans. All these loans carry lower interest rates because they somehow mitigate the lending risk.