Suddenly losing your job can present you with a challenging financial situation. Not only are funds limited, but you might find that you require extra liquidity. Unfortunately, this could dictate that you will be forced to borrow money in the form of a personal loan. Whether referring to replacing a defective boiler during the winter months or addressing medical bills, the fact of the matter is that this type of loan should be seriously considered. Let us therefore take a look at the mechanics behind this option in order to be completely aware of the choices at your disposal.
Choosing a Private Lender
One of the major issues encountered when applying for a standard personal loan is that financial institutions will be hesitant to lend funds to a borrower who is currently out of work. The other potential problem is that the terms and conditions (particularly the interest rates) could be rather unforgiving. This is why it is often prudent to seek the aid of a private loan specialist. These lenders have been known to provide applicants with up to £25,000 pounds although this will vary between different firms.
The Different Types of Unemployment Loans
As you might imagine, there a number of different programmes to choose from. These will depend upon your discrete financial situation as well as your credit rating. Some of the most common include:
- Loans for those with no bank account.
- Loans intended to address those with bad credit.
- Guarantor-based loans.
- Logbook Loans.
It may be possible to be approved for a loan if you have no bank account. However, this will normally depend upon if you are able to prove that you still have a steady source of income. Collateral such as a vehicle or the equity in your home may also be taken into account.
Bad credit loans will likewise depend upon your past borrowing history and how responsible you have been with previous debts. Other factors including how long you have resided at a specific address are often analysed.
It may be possible to apply for a guarantor loan if you have someone willing to enter into the agreement. The only drawback with this variant is that the annual percentage rate (APR) can be as high as 49.9 per cent.
Logbook loans may be a final option although your car must be less than ten years old. These loans are associated with the highest interest rates (up to 80 per cent), so be sure to carefully review the terms and conditions associated with the lender before making a final decision.
The Financial Light at the End of the Tunnel
The good news is that loans for unemployed individuals represent a viable option in order for you to get back on your feet. Still, understanding how they function as well as the available options is absolutely critical if you hope to make an informed decision.