What Are the Upsides and Downsides of Loans for the Unemployed?

Loans for the unemployed can add a lot of burden to your finances. These loans are like payday loans in regards to interest rates. Borrowing money from a mainstream lender can be harder when you are out of work. Most probably you will be refused, but loans for the unemployed from a direct lender are an option when you need money for an emergency.

These loans are aimed at those who have lost their jobs and need money for unforeseen expenses. Like other small loans, the repayment length of these loans is also very small. Whether or not you land a new job within that span, you cannot wriggle out of payments.

While using these loans, you must have a plan to clear the dues. Otherwise, penalties will continue to increase, intensifying the size of debt, and your credit score will weaken. You are given the nod for these loans if you have a side gig. If not, your unemployment benefits will serve as the basis for your income. This will prove to be a very expensive debt when you use your benefits to repay the debt.

How are loans for unemployed beneficial?

Unemployed loans from direct lenders in the UK are recommended only for funding small emergencies. Make sure you are comfortable with payments. Here are the advantages of these loans:

·         Quick access to funds

As these loans have been aimed at funding your unforeseen expenses, you will get access to funds as immediately as possible. Most of the time, lenders will process the application the same day you put it in, and after its completion, you will get money directly in your bank account. If you put in the application late in the evening, you will get money the next working day.

·         Fixed interest rates and term

These loans carry fixed interest rates, so you can manage payments easily. Usually, these loans are paid off in a lump sum on the due date. You can set aside that much money as you know how much you have to pay back. The repayment term of these loans is also very short. The duration will remain fixed, which cannot stretch beyond a month. Once the payment is made, you are absolutely free.

·         Bespoke deals

A lender will provide you with personalised deals so you do not face any difficulty repaying the debt. You will have to provide your financial details so a lender can decide how much money you can afford to repay. This helps decide how much money they should lend you. Further, it also helps decide whether to offer a lump sum payment plan or an instalment payment plan.

What are the drawbacks of loans for unemployed?

You will have to decide deliberately while applying for these loans. If you fail to repay the debt, you will end up taking a toll on your credit score. A lender will send your account to collection agencies. You might face dire consequences. Here are the drawbacks of these loans:

·         High-interest rates

A lender is taking on a huge risk when you are applying for a loan with no income. In order to mitigate it, they will charge you high-interest rates. It can be challenging to have enough money to pay off the debt despite smoothly meeting all essential expenses. In the event of falling behind on payments, you will fall into debt.

Interest rates will be even higher if you seek unemployed loans with a bad credit rating. It can be arduous to keep up with payments.

·         Credit score can be badly affected

Once you roll over the loan, you will see the loan is quickly adding up, which makes it more and more difficult for you to repay it on time. If you make a default or delay in the payment, your lender will report your misdemeanour to credit reference agencies.

Unemployed loans cannot help you boost your credit score despite settling them on time, but they can damage your score if you do not pay them back on time. Once you lose your credit points will make it more difficult for you to borrow money from a direct lender at lower interest rates. For most of the loans, you will be straightaway refused.

The final word

Unemployed loans are quite expensive. You should be wary of your repaying capacity while applying for these loans. It is suggested that you build an emergency cushion for such tough times. This will help you cover unforeseen expenses without having to apply for a loan.

If it is necessary to use these loans, make sure you borrow from a reputed direct lender that charges lower interest rates. Compare rates before applying for these loans. You can also get information about rates from lenders’ websites and call their customer support team.

Description: Loans for the unemployed provide quick access to funds at fixed interest rates and terms, but they can throw you deeper into debt if you cannot afford to pay it off on time.

Our Contact Address:

35f, Throgmorton St London EC2N 2AN (UK)

Mobile:  +44 1133-101-192

Email: info@cashloans2go.co.uk