Loans for the unemployedPosted on September 7th, 2010 William No comments
There's no doubt about it; being unemployed sucks. Obviously, you have no money coming in. It's not uncommon to suffer from feelings of depression and loss of identity. To make matters worse, if you find yourself in need of money, it's impossible to borrow because nobody wants to lend money to someone without a job!
If you're unemployed and need to borrow money, there are options. Unfortunately, most of them are bad. Those companies that advertise loans for unemployed people know you're desperate, and they take advantage of that. If you absolutely must have a loan, what do you need to watch out for?
First off, beware of anyone charging a fee to apply for a loan. You might have to pay a loan origination fee once you actually get the loan, but if so it should always be deducted from the amount you're given; you should never be asked to hand over money out of your pocket. If the lender requires you pay them, run, don't walk, out of there and never go back.
Pay very close attention to interest and fees. Payday lenders (aka loan sharks) generally don't quite you an interest rate; they just charge a set fee to let you borrow money for a few weeks. Unfortunately, that fee often equals an annual interest rate of several hundred percent! While you would think that a payday lender wouldn't be interested in working with someone who isn't getting paid, they'll be willing to lend you money still (at an outrageous fee), particularly if you're getting money from other sources such as unemployment benefits.
As with any attempt to borrow money, your credit rating is very important. Two people with the same amount of income and debt will get very different responses to their requests to borrow money! Depending on your financial situation, you may have options where your current income is not a factor, or at least is less of one. For example, if you own your home, you may be able to do a line of credit or remortgage to take money out of your equity. Even if your credit is lousy, the equity in your home may allow you to take out a bad credit remortgage.
If you can't get a loan that doesn't look at your current income, this will generally put you smack into high risk personal loan territory. However, if you have good credit and have always paid your bills on time, lenders who specialize in this sort of thing may be willing to offer you a loan that does not need to be repaid until you manage to find a job; the assumption is that you're the type of person who will pay his debts as soon as he's able. Of course, you do pay a premium for them taking that risk that you will, in fact, find a job and start paying the loan back at some time in the near future!
It's best to do whatever you need to avoid going into debt, but if that's not possible, speak with a professional at a company offering loans for the unemployed. Whatever you do, though, always read the fine print!