Loans for Unemployed – Help in Need
Loans for the unemployed help consumers to obtain money while they are experiencing difficult times during unemployment. These personal loans can be secured as well as unsecured and both carry some advantages and shortcomings. So you should prudently choose which type of personal loan suits you and your financial situation. But whatever type of personal loan you choose and before you decide to proceed with the loan, always make sure that you will be able to meet all of the monthly payment requirements. By doing this, you will ensure that future transactions regarding personal loans will be seriously considered and interest rates and terms will be competitive. Your credit rating will remain intact and you will avoid foreclosure problems and other collection related issues. We will explain in more detail in the following paragraphs.
If you are unemployed, money is going to be tight for awhile until you find your next job. You still need to put food on the table for your family and pay all of the regular monthly bills that everyone has. These include utility bills, taxes on your home, rent if you rent a home and upkeep on your home for those more serious maintenance issues. You may be receiving unemployment insurance for some period and this income is usually not enough to look after these bills, so many consumers turn to other sources of money such as personal loans to help get them through difficult periods. A personal loan or line of credit can be a huge help in these difficult times, however as we mentioned earlier consumers must manage their cash flow carefully. They must also make difficult decisions regarding what services they may want to terminate in order to reduce their overall expenses.
Personal Secured Loans for Unemployed Consumers
Personal loans that can be secured with the equity in your home usually offer the best interest rates and the best terms for consumers looking for a loan. For clients who are unemployed, they also offer the lender the additional confidence that they will be able to recover their money if the borrower cannot repay the loan due to being unemployed. Loans for unemployed people are a huge help for those that are in need, however borrowers also need to be careful that they will be in a position to meet the monthly payments until such time that they begin working again.
If for some reason the client is unable to repay the secured personal loan, the lender may imitate a claim against the client which could start the sales process of their home. While secure loans are cheaper than non secured loans, you are placing your home at risk if you cannot repay the loan.
Many consumers do not understand the risk they are taking when they place their home as security for a personal loan. Ask the lender to explain all of the details and the consequences of missing a payment. When you do land a job let the lender know that you have a job now so they can update their records. Ongoing communication is always a good thing to do when you are having trouble meeting payments. Lenders will know that you are committed and will make every effort to repay you personal loan.
Unsecured Personal Loans for Unemployed Consumers
These kinds of loans do not require any kind of security to be provided. Lenders may challenge clients regarding how they intend to repay the loan given that they are unemployed. Borrowers should be prepared to show how they intend on meeting all of the payment requirements and were the money may come from. Some borrowers may have savings that they cannot gain access to at the moment. GIC’s that are locked in for a 12 month period are good examples. Cashing GIC’s early trigger a penalty which usually means that much of the interest income would be lost. A personal loan is an excellent way to bridge the gap in income until the investment is available without penalty.
Borrowers should also assess how much the loan would cost them in this case vs. how much interest income they might lose if they were to cash their investments in early. If the personal loan cost is less than the investment income, then a personal loan should be considered.
Your lender or broker can assist with the calculations of interest cost vs. interest income to help make the decision regarding which approach to take in terms of a loan for unemployed clients.
Seniors and Consumers on Disability are Unemployed
Many seniors who are technically unemployed, but are receiving a pension from their company or are receiving benefits from the government also apply for personal loans. In some cases consumers are injured at work or at home and are unable to work for some time while they recover.
They may be unemployed while receiving disability benefits during their recover period. The lucky ones have their full pay while recovering from whatever may have happened to them. Other consumers may only receive a portion of their pay while in recovery. They also have medical bills to pay for and often prescriptions that need to be filled to help them deal with their medical issues. All of this takes money and sometimes a personal loan is the help you need to get through this period.
Applying for a Line of Credit Personal Loan While Unemployed
A line of credit is another type of personal loan that can be either secured or unsecured and applied for while you are unemployed. Instead of receiving a personal loan in the full amount all at once, clients can draw on the line of credit when they need money up to the maximum amount approved for the personal loan line of credit. In terms of monthly payments, lenders usually request that borrowers pay the interest accrued on the line of credit each month. This is the minimum payment that you need to make.
Of course if interest rates go up so will your payments. If clients can repay some or all of the line of credit, which they can do at anytime, the interest cost is adjusted based on the balance that you carry. A line of credit can be repaid at any time with no penalty. It can also be drawn on at any time as well as long as the limit or maximum approved amount has not been reached. Lines of credit personal loans are a great tools for many people including the unemployed when they need help.