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Personal Loans for Unemployed
It can get tricky when you’re unemployed and you need a loan. Lenders would generally want a borrower to at least have a stable job or source of income so they know that there is somewhere that they can get the funds from when making the loan repayments.
However, there are lenders who can look beyond that and still accommodate you despite the absence of a regular job. To avail of their services though, you’ll need to show proof that you can afford the loan that you plan on taking out. It could be any form of income that you are getting on the regular. It could be from investments, a part-time job, or even benefits and welfare payments that you may be receiving from the government.
To verify that you can indeed pay for the loan, lenders will likely want to get access to your financial and banking history. They’ll need to be sure that there is enough money that you’re receiving every month that could at least cover the repayment costs.
Lenders are more likely to let you borrow money if you can offer a guarantor. This is another person with better credit standing than you. They should also be regularly employed, with some lenders even requiring a guarantor to be a homeowner to get approved. Guarantors will have the legal obligation of paying for your loan in the event that you can’t make the payments anymore. But it should give you access to better loan offers and deals that you otherwise wouldn’t.
You’ll also have more chance of getting funds through a loan if you will present security. When you’re unemployed, lenders will generally consider you as a risky buyer. This is why if you will choose to present come from of collateral, they’d be happier to lend you money knowing that there is something they can use to recover their funds in the event that you are unable to pay them back.
How Does Taking a Loan Based On Income or Affordability Work?
When you take out a loan, you borrow any amount of money from a lender for whatever purpose you intend to use it for. If it is a mortgage, it is to be used for buying a house. If it is a car loan, it is intended for purchasing a car. If it is a personal loan, it can be used for any legal purpose you have in mind.
Borrowing money costs money so you will need to pay back not only the principle loan amount but the borrowing costs as well. Lenders charge interest depending on the amount borrowed, the length of time you intend to pay the loan back, and such other factors that they will deem necessary for loan approval.
Loans can be short term or long term. Generally, short term loans will mean higher monthly repayments. But if you choose a longer loan term, you could get charged higher interest rates. Still, people that want to enjoy more affordable monthly repayments often go for a longer term.
You can choose to get a secured or an unsecured loan too. Secured loans are those taken out against a valuable asset such as a car or a house. Most personal loans are unsecured ones. However, presenting security or collateral when taking out a loan increases the chance of approval and often opens up better loan offers ad opportunities than taking one out without any asset involved.
To apply for a loan, you need to meet certain eligibility requirements. Most lenders need borrowers to be at least 18 years old and to be a resident in the country. Having an active UK bank account is also another requirement and having some form of income is also required.
Applying for a loan means that lenders will need to perform credit checks to see if you have a good credit history and to find out if you can afford a loan. Once everything is in order, you get the lender offer and if you agree, you affix your signature, wait for the money to be released. The next month, you start paying it off until such time as the loan term is completed.