Loans for Unemployed
While most loans are meant for the employed, nobody needs financial assistance more than people between jobs.
You’re probably at a tight spot because of the unemployment already, so when life throws a sudden financial obstacle at you, it can get tough.
Also, many lenders refuse to offer unemployed people loans because they’re not sure if they can afford it. That being said, things don’t have to be so bleak.
While it can be a little bit harder to borrow money right now, it’s not impossible. So, continue reading to know everything about loans for the unemployed.
What to Know About Loans for Unemployed People
Everyone tells you before you take out a loan to look for a responsible lender, but what makes one responsible and another not?
Responsible lenders won’t lend you if you’re unsuitable for their contract and there’s no proof that you’ll be able to repay what you’ll borrow according to the agreement’s terms.
Responsible lenders who turn you away under such conditions are better than those who exploit your financial vulnerability, especially when you’re unemployed, to make you borrow money that you won’t be able to repay, so the payments that you’ll have to pay eventually will pile up badly.
Fees and Charges
Now that we’ve reached the topic of payments, it’s important to understand how much each loan agreement will cost you. When you pay back a loan, you don’t just pay back the principal. If it’s not an interest-free loan, you have to take the interest rate into account.
Moreover, there are always late fees, so please only take out loans that you know you’ll be able to repay on time because lateness makes everything more costly.
In addition, some lenders charge other fees, such as application, origination, processing, prepayment fees, and you should know how much they cost before making a commitment.
Can an Unemployed Person Get a Loan?
Yes. While it’s more complicated for people that don’t receive full-time income, there are many responsible lenders who welcome providing loans for the unemployed on benefits, once they assess their ability to repay the loan according to the agreement.
Types of Loans for Unemployed
Here are the most popular loan options for unemployed people in Australia.
1. Centrelink Loans
Many people on benefits such as Centrelink still struggle in the face of unexpected financial adversities. So, they have two options that can help out: Centrelink advance payment or fast cash loans for unemployed people on Centrelink.
Pros of Centrelink Advance Payment:
Interest-free and Risk-free
When you get a Centrelink advance payment, you get a portion of your already existent benefits from Centrelink. You don’t pay interests, and there are no financial shenanigans that you need to worry about.
Cons of Centrelink Advance Payment:
Since it’s already a portion of your benefits, chances are it’s not going to be much if you need a lot of money. However, it’s still worth considering more than other options.
Pros of Fast Cash Loans:
Fast cash loans for unemployed people are the perfect way to get a lot of money when you need it.
If you’re in a financial emergency that puts you in a place where you really need a short-term solution no matter what, fast cash loans for the unemployed can get you instant money. If you’re lucky and eligible, you can even get same-day approval online.
Cons of Fast Cash Loans:
Unemployed people are more at risk of being in debt than their employed counterparts. So, you have to keep in mind that fast cash loans are more expensive to repay because of interest rates and potential additional fees.
2. Bad Credit Loans
Having a bad credit when you’re unemployed isn’t unheard of, and that’s why loans for unemployed people with bad credit exist.
Pros of Bad Credit Loans:
Instead of judging you according to your credit score, lenders of unemployed bad credit loans examine your recent bank statements, which is a far more accurate judgment of your financial habits and capacity to repay the loan.
Cons of Bad Credit Loans:
Loans for the unemployed with bad credit tend to be secured. Secured loans refer to using one of the borrower’s valuable assets as collateral, such as property, cars, or valuables.
Borrowing against your assets is fine when you’re 100% sure you’ll repay everything on time. However, if you fail to do so, the lender has the right to take possession of that asset and sell it.
3. Guarantor Loans
Some people are not only unemployed but don’t have any form of income to help them repay their loans themselves. So, they get a guarantor, usually a close family member or friend, to repay the loan for them.
Pros of Guarantor Loans:
When there’s a guarantor, your lender feels that the loan is already secured, so they’re more likely to accept your application, which is something that most unemployed borrowers struggle to do on their own.
On the other hand, you feel more secure because you won’t have to worry about repayment when you’re in the middle of a financially tough spot.
Fresh New Start
Since a guarantor will pay back on time, this loan could actually improve your credit rating and give it the boost that will help you financially in the future.
Cons of Guarantor Loans:
Guarantor loans are an excellent option for unemployed borrowers, but they’re notorious for their interest rates. However, some factors, such as a good credit score, can lower the interests a bit.
Risky for Relationships
Although including friends and family in these kinds of situations makes us feel more financially secure, you could be risking these relationships if things go south. So, make sure to be honest about your situation and that your guarantor is also trustworthy enough.
Although financial emergencies make us want to get fast money before we weigh our options, you should think carefully about the available loans for people with no job. Educate yourself and be realistic, then apply for a loan that’s more suitable for you.