Life is unpredictable; things can change from one moment to the next. Yesterday you grabbed an impressive deal of your credit card and today your employer made you redundant. Unfortunately, it strikes a blow to your finances. The situation exacerbates when you are running out of emergency cushion.
Your unemployment status may hold you back from taking out a new loan because of high risk involved in lending you money, and if they disburse funds, they will charge a high rate of interest to minimise the risk. If you are out of work and your credit history is less-than-perfect, you should consider taking guaranteed loans for unemployed. However, bear these factors in your mind.
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Your income status
Do not expect any financial assistance from financial institutions if you are flat broke. Direct lenders do not have problem in lending you money as long as you have an income source. Whether you have a temporary job or an income-generating asset, you can apply for unemployed loans. However, the lender will charge a high rate of interest.
Before you jump at any offers, you must look over your income status to find out whether you will be able to pay back the money. Contact several lenders, know about the interest rate and then compare the deal and analyse how much money you are left with after paying back your debt. Make sure that you will have enough to meet your regular expenses. Otherwise, you will continue to take a rollover debt on and off, which means a permanent circle of debt.
If you do not arrange a guarantor or collateral, you pay whole of the debt at once. However, instalment option is available for those borrowers who put security against the loan. Before you apply for the loan, ask your direct lender for poor credit instalment loans. These loans carry relatively cheaper interest rate, however, you need to secure your loan.
Things to avoid while taking out an unemployed loan
- Making multiple loan applications
While there is no certainty of having the loan approved, borrowers put in the application at several lenders, but it takes a toll on financial report. Multiple loan applications mean multiple enquiries, which prove to a lender that you are hungry for a loan. They may infer that you rely on your loans for funds and chances are you will flinch from payments. Unemployed loans are disbursed within the same day, so you do not need to make hasty.
- Taking out more than you can afford
Unemployment loans come with high rates of interest, so you must consider repayments. It is not wise to borrow a loan that you cannot afford. Unemployment is ephemeral, keep trying to find a new full-time job. Meanwhile, get the loan that does not burn a hole in your pocket. Even if you can afford a big loan, try to restrict the borrowing limit.
- Applying with very poor credit history
If your score is extremely poor and a CCJ has been issued against you, you should apply for a CCJ unemployed loan instead of guaranteed unemployed loan.
To ensure that you get the best deal, do extensive research and compare deals offered by lenders. However, you also need to look over the strength of your budget.