How to Get an Emergency Loan if You are Unemployed


Under no circumstances will banks sign off on a loan application when you are out of work. Though you borrow money when you are strapped for cash, you still need some money to ensure you can repay the debt.

Loaning is not charity. A bank or a lender would want their money back, so they will lend money only when you prove your repaying capacity. A couple of lenders are out there that lend money despite unemployment.

Is it real or fishy?

Well, online lenders have become more flexible with their lending policies than banks, so it is actually possible to get the nod for an emergency loan if you are out of work. Having said you should have some money to pay back the debt. How will you qualify for a loan when you have no job?

Not to mention, your savings cannot be regarded as your income, so what is it? Your passive income will come into play. Income other than your full-time job is called passive income. It could be unemployment benefits, dividends, rent, freelance income, windfall, etc.

A lender will lend on the basis of your passive income. 

How to get an emergency loan if you are unemployed

Unemployed loans are aimed at helping you tide over during emergencies. Therefore, the size of these loans is very small and generally requires to be paid down within a short span. These loans could be a bit expensive as there is no 100% surety about your repaying capacity.

Therefore, it is worth essential to ensure that you get the most affordable deal at the time of applying for these loans:

·         Ensure your credit report is in a good condition 

A credit check is a must. Though online lending is more liberal than traditional lending, it does not mean that it will rebuff the basic criteria to determine your eligibility. Your credit check is a must even though you are taking out unemployed loans.

It is a must to have a good credit rating to qualify for loans for unemployed. You will likely get money at affordable interest rates if your credit rating is good. Lenders can approve your application despite a bad credit rating, but you will likely get money at a higher interest rate.

If your credit score is not up to scratch, you should try to do it before you apply for these loans. Here is what you can accomplish to maintain your credit score in good condition:

  • Make sure that you do not owe another debt. You should be free from debt obligations, including credit card bills.
  • Make sure no credit is recent on your credit report. 
  • The credit card balance should have been settled. 
  • Make sure that you maintain your debt utilisation ratio at 25%. 

By improving your credit score, you will likely have a chance to get money at the best interest rates.

·         Proper research is a must

Interest rates vary by lenders. They vary by lenders because some charge monthly processing and administration fees. Do extensive research before you take out these loans. 

Contact customer care support and get an idea of their fee structure. You can know about it by visiting lenders’ websites. Use online calculators to know the estimated cost you will have. 

A couple of websites compare the interest rates of different lenders. These websites can be very beneficial for you in picking the best lender. By using an online calculator, you will get the estimated amount. 

The actual cost will be higher than the estimated cost. Knowing your affordability beforehand lets you decide if it is worth borrowing money.

·         Borrow less money than you need

A rule of thumb says that you should borrow less money than you need in order to qualify for unemployed loans at better interest rates. A lender will lend you money based on your affordability. 

They would like to get an idea of whether you are able to pay back the debt despite meeting all of your expenses. If they are sceptical about your repaying capacity, they will straightaway turn down your application.

Therefore, it does make sense to borrow less than you need. For instance, you should borrow £150 instead of £300 as this whittles down the risk of default. A lender will feel more comfortable loaning you. 

The lower the borrowing amount, the lower the interest rate will be. This makes debt more manageable.

Should you apply for no credit check loans?

Some lenders offer no-credit-check loans to those who cannot afford a hard credit check. You can avoid having hard inquiries on your credit report, so your credit score will stay strong.

Remember that a lender will call your credibility into question. You will be regarded as a borrower with high default risk. This will attract a very high-interest rate. Loans for the unemployed with no credit check should be avoided as you can fall into an endless cycle of debt.

These loans could be more expensive than standard unemployed loans. Do not forget that you must meet the payment from your passive income. A chunk of the same income will also go toward your monthly expenses. 

Therefore, you must avoid these loans. You will be paying down four times the borrowing amount. 

Wrapping up

To get emergency loans for the unemployed, you should ensure that your credit report is accurate. Try to improve it before you apply for a loan. Do proper research to choose a lender with the most affordable interest rates.

Avoid taking out a loan with no credit check. Otherwise, this can increase the risk of falling into debt. 

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