When you’re unemployed cash flow will likely be tight, and that means you may want to get a loan. Lenders in many cases are reluctant to lend money to those without a secure and steady job or salary. Nevertheless, there are possibilities open, so here is a guide to acquiring a loan if you are not working.
Loans for the unemployed
Usually, for one to be considered for a loan by mainstream lenders he/she will need a stable salary, but there are a growing number of specialist providers of loans for people without a job. So being without a job, salary and security to lend from high-street banks do not necessarily suggest you are not going to get access to funds.
There could be different factors at play which makes it tricky to have access to credit. For instance, you may have problems with a poor credit history, which often ensue when you missed repayments previously, or you may have had a bankruptcy against your name. Since you don’t have a job right now approaching a bank does not guarantee you will not get access to cash. In this situation, it doesn’t imply that all lenders are going to reject you. It actually means that you have fewer options, and loans can come with higher interest rates.
Improving your credit history
As an alternative, if you’re without a job and seeking a loan and intend to make yourself more attractive to lenders, it is important to work on bettering your credit score. This can be done for instance, by putting your name on the electoral role whenever the local authority sends you details of this.
Additionally, ensure you space out your applications for credit. Each time you submit an application for a loan, you will leave a ‘footprint’ on your file – in case you’re turned down, this would clearly inform the next lender to lower the probability of accepting you. Once you get credit, ensure you keep up repayments to progressively rebuild a poor credit history.
Types of loans you can get
You will not be able to make an application for the best buy loans obtainable, those with the most appealing terms and rates. These are often available only to borrowers with clean credit histories that are in employment.
But, there are actually specialist lenders that provide loans to people who are a greater risk due to their poor credit history, or lack of employment.
Sad to say, the greater the risks you are considered to be by the lender, the more interest you are going to pay. It is the people who need access to credit most who are confronted with the highest interest rates from lenders.
While you might face high-interest charges, taking up a loan provides you with the opportunity to demonstrate that you’re a reliable borrower as long as you keep up repayments. It can help tide you over when you are trying to find work, but make certain not to overstretch yourself in the meantime. The most suitable option if you are out of work and without an income, however, is not to borrow at all.
Join our newsletter
Subscribe to get the latest "Engineer Your Finances" content via email.
Leave a Reply