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When you have a regular job, the number of loan options available for you would often be plenty. It is a different story though if you are not employed. Most lenders would do affordability checks when assessing loan applications and to pass this, a borrower usually needs to have a job.
Finding Cheap Loans for Unemployed
Just because you are not employed does not mean that your financial needs and bills will stop. If anything, you’ll likely be more in a financial crunch because your expenses continue but you do not have regular money coming in, this will also likely increase the possibility of you needing some financial boost through a loan.
In the UK, you can still take advantage of a loan even when you’re unemployed. There are lenders who would be happy to offer you a loan and look beyond your credit score as long as you can prove to them that you have the means to pay it back. There are pros and cons to these types of loans, however, so you know exactly what you’re in for.
Advantages of unemployed loans
You can use unemployed loans to get funds despite your current employment status. If you have an existing debt, you can use this opportunity to resolve it through the funds that you’ll be getting. You also have the option to either get a guarantor or not. With a guarantor present, you are likely to get more loan offers from lenders since there will be an individual who will vouch for you and will take on the loan on your behalf if you cannot pay it back.
Drawbacks of unemployed loans
Be aware that interest rates are going to be significantly higher than standard loans when you take out an unemployed loan. Lenders will look at you as a credit risk since you do not have a stable income. One way for them to lessen such a risk is to charge more expensive rates.
Lenders are still going to ask for proof of income though. Since you do not have a job, you can instead show proof that you are getting some form of income. This could be in the form of state pensions and government aids. If you are self-employed, be sure to show proof of that too.
In the past, getting a loan when your credit is poor is just wishful thinking. Banks and other traditional credit providers are known to put a lot of emphasis on a borrower’s credit score. If your score is bad, it’s very likely that your loan application is not going to see the light of day.
Bad Credit Lenders
These days, however, loans are more accessible to the rest of the public. Even when you have not kept a good credit score over the years, there are lenders that are still willing to give you the benefit of the doubt and offer you the financing you need. Specialist lenders are often bad credit lenders that focus their services towards those borrowers that are usually shown the door by traditional credit providers.
Bad Credit Loans
While there is really no such thing as a bad credit loan, the loans offered by bad credit lenders are centred towards those borrowers whose credit scores do not meet the minimum figures required by traditional lenders to get awarded a reasonable borrowing rate. Bad credit loans intend to offer assistance to low credit borrowers through taking into account other aspects of their financial and personal profile.
These are usually unsecured loans, which mean that the amount that borrowers may be allowed to take out is significantly going to be lower. They are also charged with very high interest and fees too. Lending money to bad credit borrowers is risky, after all. Lenders can mitigate these risks through imposing rather hefty fees.
If you intend to take out more, it may work to your favour to present a guarantor for the loan or to provide collateral. Lenders are often more flexible to borrowers that can offer some form of security for the loan. If you can offer more assurance that the lenders will be paid back, they will likely agree to letting you borrow more.
Still, just because you’re allowed to borrow more doesn’t mean you should. Always consider your capacity to pay before you decide so you can trust that paying the debt back is not going to be a problem later on.