What are the sources of loans for people with no job?

It should not come as a shock when you sit at your desk and open your email account, hoping for a deal with your client coming off, only to find that you have been sacked. Your employer can give you the push without any of the slightest hint. Sometimes, it is so unexpected that you feel as if your whole world has come crashing down around you. This moment you get bad news, and the next moment, you start freaking out about your bills, debts and other recurring expenses.

It can be hard to get by when you are out of work. Of course, you have a chance to apply for unemployment benefits, but they are a paltry sum, not sufficient to make ends meet. Moreover, you cannot hinge on them for long-term unemployment.

In addition, you must have some savings to fall back on to keep your head above water. Despite a larger emergency cushion, you may fall short of cash to meet all expenses. Here comes the role of loans. Here are the types of loans you can take out when you are out of work:

Short-term loans for unemployed

When you lose your job and need money for emergency purposes, short-term loans for the unemployed can come in handy. These loans will help tide you over in your tough times. However, it does not insinuate that you do not need income at all to borrow money.

No lender will let you take out a loan until you prove your repaying capacity. You must have a side gig, a part-time job or any other passive income source to ensure you will repay the debt on time. The advantages and disadvantages are as follows:

• The amount is small, so there is no risk of falling into debt.
• Soft credit checks will be made that do not leave any search footprints on your credit report.
• The amount will be transferred to your bank account the same day.
• The whole sum will be paid off in a lump sum, which can be quite challenging for you.
• High interest rates will be charged.
• They cannot help you meet big expenses.

Doorstep loans

Doorstep loans are the same as small emergency loans. They are called doorstep loans because of doorstep service. You will get money on your doorstep from one of the representatives of your lender. The representative may even collect money on your doorstep; however, it does not suggest that you should not have a functional bank account. Here are the upsides and downsides of doorstep loans:

• Doorstep loans are extremely convenient. You can discuss all your requirements in person.
• The funds are processed fast as they are aimed at meeting unexpected expenses.
• Doorstep loans are extremely expensive because fees are added for a doorstep service.
• You can fall into debt if you fail to pay it off on time.
• The annual rates for doorstep loans can be as high as 1,500%.

Same day loans

Same-day cash loans are similar to payday loans, but they are aimed at funding small needs of the unemployed. You will need a passive income source to prove your affordability. If you do not have any side gigs, you can use unemployment benefits as your income. You will get funds the same day you put in the loan application; however, in the late evening, the funds will be transferred the next day. The following are the pros and cons of same-day loans:

• You can access funds without further ado.
• Some lenders run no credit checks at all.
• No guarantor is required even if your credit rating is bad.
• Same-day loans carry very high interest rates.
• They can be exorbitant if you get them without any credit checks.
• The risk of falling into debt is very high because of a lump sum payment.

Bad credit loans

Bad credit loans can meet both small and large fund’s needs. They are particularly aimed at people with a steady source of income, but a few lenders might consider your application despite the fact that you are unemployed. As long as you have a side gig or unemployment benefits, you can apply for these loans. Bad credit loans have the following upsides and downsides:

• Bad credit loans can let you borrow a larger sum, provided you can repay the debt.
• No guarantor and collateral are required to get the nod.
• Bad credit loans are expensive. They carry high interest rates.
• Hard checks will be made to lower your credit points temporarily.
• If the amount is so small, you will have to pay it off once and for all. Chances are you find it hard to manage payments.

Ways to qualify for unemployed loans fast

Here are the ticks on how you can get the nod for unemployed loans:

• Get a side gig. Unemployment benefits are not enough.
• You should try not to owe any other loan at the time of seeking unemployed loans.
• Pay off your credit card balance before applying for loans for the unemployed.
• Borrow a small amount of money.

The bottom line

It is certainly complex to get the nod for loans for the unemployed because you should have a stable income source to prove your repaying capacity. No ethical lender can sign off on your application without running an affordability check, which includes your repaying capacity.

Lenders will check your credit score as well. However, most of the loans are approved with soft checks only. The maximum amount you can borrow when you are out of work is up to £500, but a few lenders can be a bit more flexible by making it up to £700. However, it depends on your income sources.