There is no doubt that becoming unemployed makes a dramatic difference to ones financial position. All of the luxuries previously enjoyed have to be let go of – at least until a new job is found. But the essential expenses, like utility bills and debt repayments, need to be looked after all the same. An unsecured unemployment loan can be the answer.
Designed to offer the unemployed a cash injection to cover the essentials, only a certain kind of lender will provide financing without security or employment. But just as a leap of faith is taken in students and their futures, these lenders believe the borrower will find a source of income again sooner rather than later.
There is a variety of secured unemployment loans to get, with security assuring approval. But with the unsecured version there are greater limitations, not least the size of the loan available. So, what are the key issues to consider when applying for one?
Qualifying For A Loan
Normally, the first box a lender wants to see ticked is the one that confirms an income. But, when applying for an unsecured unemployment loan, this is not possible. So what must applicants provide in order to qualify for this kind of loan?
Lenders need to know that the applicants are a safe bet, despite having no income, so they check their credit history instead. This is where a credit score can mean the difference between approval and rejection, with financing without security or employment available to those who have an excellent credit history.
Also, applicants must have become unemployed at least 6 months prior to the date of the application in order to qualify, and must have no outstanding bankruptcy or county court judgments against them. If their record is clean, an unemployment loan is attainable.
Typical Loan Terms
Once an applicant qualifies to apply for an unsecured unemployment loan, the terms of the loan deal are looked at next. There are concessions to make in order to get approval, such as paying a higher rate of interest. However, securing funding is the priority, so these are acceptable.
Another concession is that the size of the loan is limited. Many lenders offering to provide financing without security or employment are not willing to lend large sums due to the perceived risk involved. Approval is granted in anticipation that a new job with be found, but this is not guaranteed.
As a result, an unemployment loan ranges from $3,000 to $20,000. When the loan is unsecured, then the sum attainable is smaller, but if collateral is provided, then the sum can be any amount necessary – so long as it matches the value of the item used as collateral.
Securing the Loan Online
As with practically every other type of loan, online lenders offer the best deals when it comes to securing unsecured unemployment loans. The key advantages are more competitive interest rates, and longer repayment terms to ensure a lower monthly repayment sum. Both of these factors make these loans more affordable.
Online lenders are known to be experts in bad credit lending, and providing financing without security or employment is included in that lending niche. And since they are experts, their loan packages are designed for those with very tight budgets.
However, as with all online transactions, it is important to know the reputation of a lender before committing to an unemployment loan deal. So check them out on the Better Business Bureau or Verify1st websites before signing anything.