Unemployment can be a hammer blow to the personal confidence of an individual, as well as to their standard of living. However, there is a way to alleviate the pressure, at least in the short term. An unsecured loan can be used to ensure that the key financial obligations, at least, are met.
Typically, the ability of an unemployed individual to pay credit card bills, utilities bills, food bills and other general living expenses, can be reduced dramatically. So, getting a fresh injection of funds to manage the situation is hugely important. But rather than it being extremely difficult to find such loans, there is a growing number of lenders offering unsecured loans for the unemployed specifically to keep their heads above water until they can find employment again.
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However, as is that case with all loans, these unemployment loans have particular terms that must be considered carefully before any decision should be made to apply for them.
Advantages of Unsecured Unemployment Loans
The advantages getting this kind of loan are pretty clear. The fact that bills need to be paid, and that income has fallen dramatically, means that extra funds are needed, Modestly sized unsecured loans are a perfect solution, providing the cash to meet bills in the short term, while keeping repayments manageable due to the low principal sum.
Unsecured loans for the unemployed are not a new idea, but the current economic climate has given them a new level of popularity. To get these loans, a good credit history is generally needed.
There are loans available to individuals with a low credit rating, which can come with very high interest rates, but when unemployment is behind necessity, the lenders have a more positive view. If the applicant has a good credit score before they lost their job, then an unemployment loan is easier to get.
Disadvantages of Unsecured Unemployment Loans
The chief disadvantage is that credit history has such a strong bearing on this type of unsecured loan. Having a low rating adds some uncertainty to the application, though profession and the likelihood of finding a new job are considerations too.
Another disadvantage with unsecured loans for the unemployed is that the interest rates are higher than on regular unsecured personal loans. This is understandable, with the lender taking on a greater risk than normal and then off setting that against the interest percentage. What this means, of course, is only the proportional repayment is high, and the actual sum should be manageable, especially if the principal is kept low.
Be Prepared
Being prepared before applying for an unsecured loan is a very good idea. This preparedness relates mainly to finding out if a loan is needed at all, let alone afforded. For some people, maybe ending Friday night dinners at the local restaurant, trips to random sports events and shopping at brand stores, is enough to free up cash to pay the mortgage.
By carefully calculating cutbacks, an unemployment loan might not be needed at all. Even if it still is, the sum requested can be kept to a minimum, increasing the chances of an application being succeed.
Also, do your homework on the various terms of unsecured loans for the unemployed that are being offered by lenders. Besides the higher than normal interest rates, there will also be penalties and extra charges that need to be known. Remember, there can always be a better deal out there, whether online or in the credit unions.
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