Understanding loans for the unemployed
An unemployed person often finds it really arduous to mobilize cash. This is made all them more difficult due to the complexities associated with taking out a loan from banks, credit unions, and other traditional financial institutions.
One of the best ways to get quick funds for the unemployed is to avail the services of online financial service providers. These companies can help connect unemployed borrowers with many lenders who may offer loans to people with no job. One of the most favorable aspects of this form of borrowing is that the procedure of application is uncomplicated and secure and the approval is fast and easy. All unemployed borrowers need to do is fill out the online application form and wait for some time to hear back from the financial services company.
Unemployed people can also choose between any of the options listed below to take out a loan.
- Get someone to co-sign the loan: Most lenders ask for proof of income from borrowers while assessing a loan application. This cannot be provided by unemployed persons. However, borrowers with no job can ask an employed family member or a friend, etc., to co-sign the loan to get the funds. The amount of loan approved will be higher if the co-signee has good credit.
- Before opting for a co-signee for the loan, unemployed borrowers have to be sure that they can afford to pay the monthly repayments and that they will be able to get a job in the coming months. If not, this option is not good for the borrower or the co-signee.
- Take out a short-term secured loan: Unemployed people can put up any asset such as a car, jewelry, etc., as collateral and take out a secured loan. It is an uncomplicated process and comes with a low interest rate. The funds are also quickly transferred to the borrower. However, if the loan is not repaid, then the borrower may lose the asset/collateral as the lender will seize it.
- Home mortgage: Unemployed persons who own a home can take out a mortgage and get the loan. The funds thus availed can be used to tide over the period till a job is found. This option is however very risky. Hence, it is important to borrow just the precise amount that you can afford to repay. Borrowing excessively via mortgage can cause you to drown in debt.
- Pawn valuable assets: Unemployed people can pawn off their valuable belongings like watches, paintings, etc., and get a loan. Pawn shops offer sufficient time to borrowers to repay and hence there is reduced risk of losing the asset. It is however important to repay the loan amount as well as the interest to get back the asset. Also, the loan offered on the asset by the pawn shop owner is usually half the value of the asset.
- Take a loan from Family/friends: If the above options do not work, then unemployed people may borrow funds from family or friends and then repay it after finding a job.