Being jobless can trigger a sudden financial insecurity feeling. Many find it difficult to cope with that. Now, being unemployed does not mean that you are not supposed to have any sources of income at all.
It just means that you are cut off from the primary source of income. Therefore, when you have no job, your overall earnings drop. This is serious as the usual expenses will continue to add up every month.
It does not matter if sufficient money is coming into your bank account, the payouts will remain unchanged. When earnings drop, a financial rift is created and you will need resources to overcome it.
A loan can be an ideal way to get additional funds when needed. However, they come with the condition of steady income. This is where you might hesitate to apply for a loan.
As a jobless loan applicant, you might assume that getting loans for the unemployed will be out of the question. This is because you do not earn from direct employment. This setback can be the roadblock in qualifying for loans.
Take a tour of this blog to understand how you can navigate this type of tricky situation.
Loan options accessible to someone who is unemployed
The reason why income of the loan applicant is verified is to make sure about loan payments. If you do not earn, repaying loans will be impossible for you. Then, getting a nod of approval from the loan provider will be impossible.
How can you apply for loans when you are jobless? There is a small twist and you can experience a different thing with direct lenders. They prioritise that the borrower should have some source of income.
For them, it is not necessary that you earn from a job only. You can show any income mean which should be steady to support loan payments. Therefore, if you earn money from a part-time job and promise to repay on time, the lender will have no problem.
Find out the conventional loan options you can access when you are unemployed.
· Short-term loans for unemployed
In this case, your affordability will be a matter of interest for the loan provider. You can prove this even by earning as a freelancer as well. All what the loan provider needs is a confirmation about loan payments from your end.
Now, if you make steady money by working on freelance projects, repaying on time should not be a problem. There is opportunity for you to pay back loans in the form of instalments.
They are small portions of the original amount you are supposed to pay back. Therefore, repaying that amount is doable even when you are earning money from a side job.
Here, you can take out a small amount of loan i.e. meant for short-term purpose. When you have small unexpected necessity popping up out of nowhere, you can rely on these loan options.
On approval, you can get immediate access to funds. By using these loans, you can address any immediate necessity. Above all, you can apply for these loans by facing minimal paperwork.
· What could be concerning?
The interest rates might go up as you are unemployed. A job increases the likelihood of getting loan payments on time. Thus, with no job, the lender can still sense some risks.
With direct lenders, you have the opportunity to pre-qualify for loans. Pre-approval will not affect your credit scores. This can easily be achieved and can allow you to scan different types of offers at the same time.
· Loans based on benefits
Receiving financial support as benefits from the Government is a common thing to experience when you are jobless. Interestingly, some personal loans have been designed to help you based on benefits you receive.
This financial support is also treated as an alternate source of income. The lender will consider this as a steady source of earnings. You can depend on benefits to make sure about repaying loans on time.
The amount of money you can borrow will be small. Moreover, the repayment tenure is going to be of short term. When you are opting for these loans, you cannot afford to miss loan payments.
This is not going to be good for your credit scores and financial condition. You will have to face additional charges for missing payments.
· What could be concerning?
One important thing you must note is to understand the type of benefit your chosen lender will accept. Not all forms of benefits are acceptable by all the loan providers.
Comparing loan rates obtained from different lenders will be good exercise. You must review multiple offers so that you can get an offer according to your financial potential.
· Guarantor loans
When you are out of a job, some lenders might consider you incompetent to get loans. The reason is that your earnings are not steady and this can make loan payments difficult for you.
If you have come across a loan provider who is not willing to help, you can ask for loan options obtainable by producing a guarantor. In this case, you will have to look for a person who is willing to become your guarantor.
Their role can be critical as they will have to support loan payments on your behalf if you fail to repay on time. The involvement of a guarantor can make the lender confident. They know that they will get back money on time.
For this reason, getting approval for these loans even when you do not have a job is easier than other kinds of loans. Because of this guarantor factor, your employment status will be less important for the loan provider.
Moreover, getting loans at lower rates is very much possible. As lender sees less risk, they might not hesitate to offer loans at affordable rates.
· What could be concerning?
Finding such a person who is ready to become your guarantor would be difficult. Everyone is having their own share of financial struggles. Amidst all these, taking up an additional responsibility of repaying loans taken out by others would be impractical.
On top of this, you will have to find someone who has good credit scores. Besides, they should be earning stable income that can help them cover multiple financial responsibilities at the same time.
· Secured loans
To fill up the gap created because of no direct employment, you can choose these loans. As you know, they need an asset from your end. This is going to be an asset-based borrowing option.
Here, the amount you will borrow can be backed up by collateral. Now, if you fail to pay back loans on time, the lender will have the liberty to sell these assets to recover the loan amount.
Therefore, defaults might lead to permanent loss of your assets. However, you can easily get approved for funds with these assets despite being jobless.
The bottom line
When an urgent necessity occurs, you might need surplus funds, but you have poor credit scores. You might wonder if getting an emergency loan with bad credit on guaranteed approval in the UK is possible or not.
There is a possibility if you can convince the lender about your repaying potential. If needed, you must try out different ways of generating part-time income. When you are in between jobs, you must earn enough to fulfil some high-priority financial responsibilities.
