4 Loan Options For The Unemployed

Unemployed LoansNo matter how much you might have disliked it, losing a job is stressful and can be scary. And If you’re failing to find new work, then the pressure only increases as the bills mount up. For this reason, you might be forced to take out a loan, but this can be difficult when you have no income – and is especially hard if you have poor credit too. So read on for a guide to your options for borrowing money when you’re out of work.

Loan Options

If you’re unemployed and have poor credit, then don’t despair as you do have options for borrowing. Banks might not be queuing up to lend to you, but these days there are other avenues for finding a loan. Unfortunately, you will pay a lot more interest for the privilege, but if you need to borrow money then you have several choices.  These include:

Overdrafts

Unauthorised overdrafts will cost you an arm and a leg, but an authorised overdraft won’t cost the earth as long as it has been approved. This is normally the cheapest option for borrowing when you have a low income, but is only really any good for the short term, and you should read the terms of the overdraft costs carefully. Apply to your bank for an overdraft extension or overdraft facility.

Online Loans

There are now hundreds of online lenders willing to lend to those with a very low income or poor credit, but interest rates can be very high and you need to choose the loan provider carefully. Payday loans should only ever be used if you are certain you can repay at the end of the month, and you should avoid paying fees to any company who are not transparent about what they do. Many people are caught out by so called ‘lenders’ making offers of loans, only to be charged a fee and receive no loan at all.

Credit Cards

Bad credit credit cards are designed for those on low incomes or those with poor credit.  Some require an income of around £10,000 per year, but others will approve applications if your income is only £4,000. And if you don’t have a poor credit history, you may even be eligible for a balance transfer card. However, be sure to use it sensibly, and always check the terms and conditions carefully first, as well as the cost of late payment fees.

Online Loans

There are now hundreds of online lenders willing to lend to those with a very low income or poor credit, but interest rates can be very high and you need to choose the loan provider carefully. .  According to https://loanwizarduk.com/, it can sometimes be cheaper to take out a longer loan than a shorter one, as interest rates for longer loans are typically shorter.

So payday loans should only ever be used if you are certain you can repay at the end of the month, and you should avoid paying fees to any company who are not transparent about what they do. Many people are caught out by so called ‘lenders’ making offers of loans, only to be charged a fee and receive no loan at all.

Credit Unions

Depending on where you live, you may be able to join a local credit union. These unions are for members who want to save and borrow, offering far better interest rates for borrowers than other credit providers. The majority of unions only used to lend to those saving with them, but the rules are now changing so contact your union to see if you can apply. You may be eligible to borrow up to £3,000.

Wendy Lin is a freelance writer and entrepreneur. She travels the world giving private finance consultancy advice to small business owners.

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