July 26, 2023
- Olsen Breet
- November 9, 2020
Unpaid bills, household expenses, school fees, and other monetary costs pile up for the unemployed. The burden can grow as the credit score gets affected, and the chance of acquiring a secured loan in the UK decreases.
Moreover, unemployment can also diminish the possibilities of borrowing from friends, family members, lenders, unions, and others. Besides this, a person can’t apply for a secured loan without offering a house, car, or another valuable commodity.
However, even during such critical times, there are options for guaranteed acceptance loans. Let’s have a detailed glance at them.
What borrowing options are there to utilise
● Payday loans
One of the most promising quick loans for the unemployed in the UK is “Payday.” It is also available for full-time and part-time employed workers. It only requires showcasing some form of sufficient and regular income in a bank account.
The recurring bank amount could include a disability benefit, job-seeker allowance, or any other form of payment(s). People that have such type of income often avail payday loans because it is given to the borrower in a four-week or more extended period.
Lenders make sure that the borrower can make timely repayments by reviewing recurring bank account summaries. The loan remains unsecured against any collateral, such as a car, home, etc.
Besides qualifying for the repayment eligibility, a borrower must offer three new criteria. These include having a bank account, an age of 18 or more, and UK citizenship. Borrowers receive their amount shortly after their application approval.
Therefore, while applying for a payday loan, a person should ensure that the details mentioned on the application have no mistakes. Moreover, borrowers can apply for payday loans through online websites, financial institutions, and banks.
● Three Month Loans
Many financial organizations and lenders provide the option of three-month loans to the unemployed in the UK. It allows the borrower to make repayments in amounts spread across a three-month duration.
The eligibility criteria for three-month loans is similar to payday loans. However, the interest on the borrowed amount substantially rises as the duration is more than a payday loan. But it is still one of the best solutions to overcome an ongoing financial crisis.
Moreover, accessibility and application processing speed of three-month loans provides the assistance required to deal with debt, mortgages, fees, etc. It is in the best interest of the borrower to take a manageable and affordable cash withdrawal.
While borrowing a three-month loan amount, a person should keep the overall interest in mind and the capacity of repayment. By doing so, the borrower can assure avoidance of long-term debts.
● Unsecured short-term loans
Besides the loan options mentioned above, unemployed people in the UK suffering a financial crisis can acquire short-term unsecured loans. These help to borrow lump sum amounts and spread the repayments across six months or more.
The critical takeaway from an unsecured loan is that borrowers wouldn’t require any collateral as a form of security. Therefore, they can retain their assets like a car or a home and still borrow a sizeable monetary amount.
A person can avail of a short-term unsecured loan from a bank, financial organization, online websites, and lenders. The only drawback of this loan is that the interest rate is much higher compared to a secured loan.
Lenders have many valid reasons for offering short-term unsecured loans at high interest. These include unemployment, failure to get a new job, no financial security against an asset, etc. Therefore, lenders have no other way of making sure of repayments besides offering loans at a high-interest rate.
The criterion for a short-term unsecured loan is similar to payday and three-month loans. It means that the borrower must have UK citizenship, 18-years of age, and a bank account. Financial organizations and other lenders provide at least £2000.
The different repayment duration and borrowing amounts help to decide the most suitable loan during financial crisis and unemployment. These also come with varying forms of offers. Therefore, reviewing loans for everyone would provide a comparison between overall repayment, borrowing amount, interest rate, and duration.
Criteria for loan application
Accessing these factors would help to reach the most suitable decision under the current financial situation. As mentioned before, lenders may require any form of monetary support for receiving timely repayments.
● Job seeker allowance
A job seeker allowance is primarily a reputable income stream given to people seeking a new job. Many lenders in the UK deem it acceptable while applying for a loan, even with an unemployment status.
● Pension funds
Pension funds on retirement or recent job loss is also acceptable while applying for unsecured loans. However, the borrower must showcase regular pension repayments and the ability to make timely repayment of the borrowed amount.
● Income stream of a guarantor
A guarantor’s income stream decreases lender risk because a second person can make repayment if the borrower doesn’t. Therefore, it provides an incentive and security of reimbursement from the guarantor.
Olsen Breet is our in-house Financial Expert at EasyPolicyLoans, with more than a decade of writing for various finance companies in the UK. He has got this knack for turning even the trickiest money matters into something we can get our heads around. Before he started sharing his wisdom here, Olsen was playing with big numbers and advising on loans at a bank. He graduated from University of Glasgow, grabbing a finance degree before jumping into the deep end of the financial pool. Olsen’s our go-to guy for making sense of market trends and is always ahead of the curve.
