Loans for Unemployed

Loans for Unemployed

Need Loan when Unemployed?

Banks are always ready to provide loans to people who are employed. However, if you are a resident in the US and searching for a job, it might not be easy to get loan in case of any financial emergency. It is difficult to predict when someone gets fired from the job, however the financial liabilities remain the same.

In this article, we are listing some of the options that you can use if you need a loan as an unemployed.

Payday Loans

Suppose you need to pay a repair bill in the middle of the month and do not have enough credit, you can take a payday loan. You can get this type of loan if you have an alternative source of income even if you are not employed. The condition for this type of loan is that you have to pay this by next month. To qualify for this loan, you should be:

  • A US citizen and resident in US.
  • Age 18 years and above.
  • Able to show a functional bank account.

The best part about this loan is you can get funds in your account in less than 30 minutes after it is approved.

It is important to consider the rate of interest, payday loan fees before taking the loan. Payday loans have been found to have very high-interest rates (up to 400%). Also, if you do not repay the loan on time, you may end up paying many times more you have borrowed.  The lenders can even take legal action or send third-party loan collectors to you if you have not paid back the money after a certain time.

Loans with a guarantor

If you are unemployed and facing difficulty to get a loan all by yourself, it may be wiser to consider a guarantor. This makes the banks believe that they can get back their money. If you are not able to repay the loan or get bankrupt, the guarantor is responsible for paying back the money. It is possible to borrow money up to 12000 $ with the help of a guarantor. For this, your guarantor should be:

  • At least 18 years old.
  • Must not be bankrupt.
  • Have a home of his/her own.

Banks do not consider your credit rating while approving this type of loan. So, similar to the payday loan, a high-interest rate is levied. So, if you are not sure whether you can repay this loan, avoid putting yourself and your guarantor in economic trouble.

Loans at your doorstep

Certain loan companies and individuals can lend you money at your doorstep. All the procedures of the loan including taking money and paying back are done at your home. So, having a functional bank account is not mandatory. The lender takes note of your eligibility to pay the loan and the repayment conditions can be modified likewise.

A representative from the company visits you every month for collecting the monthly instalment. This makes the loan popular among unemployed people who do not have a bank account. Amount ranging from 100 $ to 2500 $ can be borrowed from such lenders.

There are mainly two eligibility criteria to get such loan approved. Some company representative will visit your residence to verify the provided information. To get this loan:

  • You should be at least 21 years old. Depending on the type of lender, the minimum age limit can be even 25.
  • One of the major conditions for this doorstep loan is it needs you to provide unrestricted access to your residence for any representative from the lender company.

One major advantage of this loan is that you can get money in your account as early as 3 to 5 days. After background verification, the lender visits your residence with the money.

Similar to the other two loan types discussed earlier, this loan also has a very high-interest rate, sometimes ranging up to 650%. The tenure for loan repayment ranges from 1 month to 1 year depending on the amount and if you are a proven customer to them.

It is advisable to opt for this loan only if there are no other options available because it draws a very high-interest rate. Also, be sure to verify identity of the company representative before letting anyone in your residence.

Secured Loans

In a secured loan, you have to keep your property or asset such as home, gold, valuable belongings as collateral to the bank and get the money. Compared to the loan types discussed till now, secured loans have lower interest rates. However, you can get amount ranging from 50 to 70 percent of your property value. Banks also consider your credit score in this loan approval process. So, if you do not have a good credit rating, this might not be a good option for you.

The risk involved in this loan is very high i.e. you may end up losing your property. So, before taking up the loan, be sure that you will be able to pay it back in time.

Unsecured Loans

If you do not want to risk your property, you can take an unsecured loan. This loan does not require you to keep any property or goods as collateral. So, the interest rates are much higher than secured loans as the lender has no security of getting his money back. If the borrower is unable to repay the loan, the lender cannot claim his property or asset.

Though this loan does not put your property at stake but failing to repay the loan can end up in lowering the credit score for you. This may prevent you from borrowing money in future from banks. These loans can be used for many purposes like paying fees, bills, vacation, marriage, etc. Depending on your ability to repay the amount, you can lend in the range of 100 $ to 2500 $ according to your need.

Bad credit loans

If you have lost your job which resulted in a bad credit rating for you, do not worry as there are some loans which you can get. You can get some flexibility with the time limit for repayment of the loan. The money lenders can extend the time for repayment at the cost of increased interest rates. The interest rate ranges from 8 % to 18%. This also depends on the amount you have to borrow, time period of loan repayment and your credit rating. To be eligible for this loan, the fulfilment of the following conditions is necessary.

  • For most of the lenders, the age limit is 21 years.
  • As collateral, you have to keep a property or some asset. This property will be sold to repay the amount if you are unable to pay back.

Before taking up this loan, it is advisable to compare the interest rates of different lenders. You may find a lender with low-interest rates which will help you in repaying the debt quickly.

Student Loan

If you are a student without a job, this type of loan maybe ideal for you. This loan provides to undergo your higher studies if you do not have a job. There are some eligibility criteria’s which you must have to get this loan. The amount of money you can borrow depends on which level you are in (undergraduate, graduate, postgraduate) and also the field of study. There are certain advantages of student loan. Some of them are:

  • Repayment options are flexible. You do not need to start paying back immediately. Once your study course is complete. You have to start payments. This gives you enough time to look for a job or an alternate source of income.
  • The interest rate is comparatively lower than many other types of loans described above.
  • There are often no criteria set on the age limit. If you have sufficient evidence to prove that you are a student, you can be approved of the loan.
  • If you are unable to repay the amount on time, there are provisions to postpone the payment.

Personal Loans

In spite of being unemployed, you have certain financial responsibilities which cannot be avoided. In such cases, a personal loan is a good option for you. This can be taken for different type of requirements like education expenses for your child, vacation, marriage, etc.

When you apply for a personal loan, the lender verifies all the details and your economic status. If you meet all the eligibility conditions and the bank considers you to be able to repay the amount, your loan will get approved. They may also suggest the type of loan according to the need you have specified and your financial status. This ensures that you do not have the burden of a very high amount which is practically impossible to repay on your part.

Compared to other short-term loans, personal loan offers a low interest rate. There is often some flexibility in repayment if you fail to payback on time.

Advance from credit card

You can withdraw some cash as the advance amount from your credit card. The amount that you can borrow depends on your credit limit for the card. If you have more then one credit card, you should distribute the load evenly so that none of your cards are maxed out.  Please note that for this type of loan, interest is levied from the day you have taken the loan. Also, if you have multiple credit cards with loans, this lowers your credit rating. So, it is not wise to take a high amount on advance if you are not sure about repayment on time.

Peer-to-peer Loans

Some online platforms have started to become popular in recent times which connects the money lenders to the borrower. Mostly, the lenders charge a high-interest rate and you do not need to keep any collateral for this. One of such popular platforms is LendingClub. Before taking this loan, you should do thorough research on the company or individual providing the loan as well as all the terms and conditions.

A loan from friends and family

If you are in distress, family and friends are the most reliable source from whom you can borrow money. This is generally without any interest rate or security deposit. However, if you are unable to pay back in some time, this may result adversely on your relation. So, it is advisable to keep your financial issues away from family, if possible.

Equity loan

This loan account is dependent on the equity that you have for your home or car. The interest rate is charged is not very high, however, you must own property for this. It is possible to convert to cash some of the equity you have.

The advantage of this type of loan is that you can get a high amount of money quickly. However, this also depends on market conditions. For e.g. as the housing market has performed badly in 2008, since then the lenders have not been very eager to approve applications for home equity loan. For older people, there are also provisions of reverse mortgage. If the borrower resides in the same property, the monthly payments can be exempted.

To summarize, even if you are unemployed, it is always very important to maintain a decent credit score. Therefore, try to avoid applying for many loans one after another. This creates an impression that you are desperate for money which leads to application rejection and low credit score. So, you enter into the vicious cycle. Most people in the U.S. live on one paycheck to another, which is very risky and may result in bankruptcy in no time.  Though there are many options to get loan even if you do not have a job, it is recommended to get some emergency funds by selling a yard or garage, working at an alternative job, applying for unemployment benefits etc. before committing for a very high interest loan which may put you in a high debt for long time.

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