Can Someone Unemployed Get A Personal Loan?
03 Feb, 2016 / By Jennifer Hamilton
Being unemployed inevitably throws your finances into chaos. You have no money coming into the home, assuming you are single, and the bills start to pile up. In the short-term, you need to find a source of money to pay off your expenses, or loans you’ve already taken out.
And if you have bad credit your bank will turn you down for a loan. There’s an alternative, though. Even if you aren’t in work, you can still get a bad credit personal loan. It does differ for people in this position, though. This article is going to cover more information on the topic.
Is it a Lost Cause?
Without any immediate way to make the repayments on your loan, getting a loan when you have no work seems like an insurmountable task. Bad credit loans for people in this position do exist. As long as you adhere to less favorable terms, you can still get the money you need to cover your expenses.
Most bad credit loans are known as unsecured loans. An unsecured loan means you are guaranteeing your ability to repay through your word and salary. In this scenario, you’ve already proven you have a job and can pay back the money. If you don’t pay back one of these loans, the lender can request a court garnish your salary and repossess your belongings.
Borrowers who don’t have a salary to garnish have to take what’s known as a secured loan. Your guarantee to the lender is collateral in the form of a house or a car. If you don’t make your repayments, they have the right to repossess your home or car to make up the money lost.
You’re in the most ‘high risk’ group of all. You have a poor credit history, which means you’ve had problems fulfilling your obligations in the past. Furthermore, you’re unemployed so it’s hard for a lender to see where you’re going to get the money from. A secured loan is merely the start of a lender’s desire to protect themselves from debtor default.
Expect higher interest rates to come with one of these bad credit loans. By charging you more in the beginning, they recoup their money as soon as they can. If you default further into your loan agreement, it won’t cause them to lose out.
The interest rates differ from lender to lender and on your specific circumstances. By deciding to put something with a higher value up as collateral, you can reduce the interest rates you pay.
In general, you can’t borrow as much money as someone who already has a job. You can only take out short-term loans with small amounts. Again, the exception comes in the form of collateral. Put up something with a higher value and a lender is more likely to increase the amount you can borrow.
It’s all about risk. As long as the lender can reclaim their money, and make a profit, it doesn’t matter to them how you make the repayments. They only care about you fulfilling your obligations.