For anyone that has lost a job, the new status of unemployed can be a major blow to the system. Not only that, but it can set alarm bells ringing, with the need to access cash surely closed until a new job is somehow found. Well, with unsecured unemployment loans, there is a way to secure loan funds even without an income.
The idea of getting loan approval without a job does seem strange, especially when no security is required against the money lent. But, the situation is similar to student loans, where the lender is interested in the future employment situation.
However, that is not to say that anyone who is unemployed will qualify for an unemployment loan. There are conditions and criteria that need to be met, and the loan sum is usually kept relatively low.
How Unemployment Loans Work
The basic idea of an unsecured unemployment loan is that people who have been recently made redundant can access much needed funds to keep them above water for a period of time. The fact that there is no source of income is not an immediate problem, as the loans are typically structured to ensure the lowest possible repayment sum.
Besides, the ability to repay can come from other quarters. Redundancy usually comes with a redundancy package, often as much as a years salary, though that depends on the period of time spent in the job. Unemployment benefits and savings are also sources of repayments too. So, granting loan approval without a job is not a foolish decision.
The idea is that cash is forwarded in a lump sum to allow the borrower to get on with life. For example, a $20,000 unemployment loan can cover vital expenditure (mortgage etc) amounting to $1,670 per month for 1 year, but require repayments of just $350 per month over 5 years.
Qualifying for an Unemployment Loan
There are conditions to qualifying for an unsecured unemployment loan, and in the absence of any income, this center around the credit and employment history of the applicant. It is also only open to recently unemployed people, who have lost their jobs within 6 months of applying.
To have a good chance of getting loan approval without a job, an applicant should have a good credit history and be considered a good bet to find a new job relatively quickly. However, bad credit borrowers can qualify if their employment history (meaning their ability to hold down a job) is very good.
A secured unemployment loan can be for any amount of money that the security provided can cover, and often home equity is used to get the highest amount. But when the loan is unsecured, the limit is usually around $20,000 – about enough to cover living expenses for a year.
Opt for an Online Lender
There are many lending institutions who offer loan packages to the unemployed, but not all of them are willing to grant unsecured unemployed loans. It comes down to the risk factor, and the chance that the borrower will not actually find a new job.
But online lenders are much more open to the flexibility required to grant bad credit borrowers loan approval without a job. Their interest rates are usually lower so the unemployment loan is more affordable.
And since everything is done over the Internet, approval is much faster with access to the funds in as little as a few hours.