What options do unemployed people have when it comes to lending?
Even if the internet is full of offers with loans for the unemployed, serious conditions can hardly be found. For the unemployed who urgently need money, there are certainly ways to bridge a difficult financial situation. The following guide presents the most important alternatives.
The purpose is important
The decisive factors include the purpose for which the unemployed need credit. Anyone who has gotten used to a certain standard of living as an employee will have a hard time if only the unemployment benefit is suddenly available. Lowering fixed costs in particular is often difficult. In such a situation, taking out a loan is not necessarily the best decision. This is especially true when it is not clear when a fixed income will be drawn again. In such a case, the top priority is to reduce the fixed costs so that the government grants are sufficient to live on.
Apply for a loan at the employment office
In urgent cases, a loan for the unemployed can be applied for at the employment office. It should be noted that the award is tied to a specific purpose. Lending is possible, for example, if a refrigerator or new clothes are needed for the children. The unemployed must always prove that the purchase cannot be financed with the unemployment benefit.
It is also possible to issue a car loan if, for example, the applicant does not come to work by public transport. The conditions for such a loan are adjusted to the personal situation of the applicant and are usually very humane. In many cases, interest is completely waived and repayment is made in low installments.
Apply for a loan for unemployed with collateral
Income is one of the most important factors when granting credit. It is also used as security by lenders. If the installments are not paid as agreed, the bank can seize the income. Unemployment benefit is not treated as income, however, as it is generally not allowed to be seized. Many banks require borrowers to have an employment contract that has been in place for at least six months. Those who are still in the trial period usually have significantly worse cards.
Anyone who owns a property or land can use a mortgage to secure the loan. This is entered in the land register and is not linked to the loan. It is not the borrower who is liable, but the land charge. It should be noted that fees are incurred when entering the land register. The land charge can then also be used for further loans.
Apply for a loan with a second borrower
As another option, unemployed people can ask their partner or acquaintance or relative to take out a loan together. If the second applicant has a good credit rating, the conditions are significantly more favorable. If the borrower finds a new job during the term, the loan can usually be transferred to him without any problems.
Personal loans via P2P portals
In the meantime, loans are also granted by private individuals via so-called P2P portals. The allocation is often less bureaucratic than with banks. Nevertheless, certain requirements are placed on the creditworthiness of the borrower. Depending on the provider, a certain minimum income is required. However, the admission of a co-applicant or guarantor is not planned. The most important thing for success is a description as precise as possible of what the money is needed for. Another advantage of personal loans is that the terms can be individually agreed between the borrower and the lender.
Loans for the unemployed involve risks
If you do not have sufficient creditworthiness, you should refrain from taking out a loan if possible. In such cases, the risk of debt is very high. Overindebtedness can easily destroy the life of an entire family. Those who are in financial need tend to make rash decisions. Unfortunately, some fraudsters take advantage of this. Favorable conditions and low interest rates are hardly possible with a loan for the unemployed.