Losing a job can have a demoralizing affect on a person, not just because of the sudden loss of income and the need to pay bills but because it is often accompanied with concerns over the ability to find employment elsewhere. If the severance pay is not particularly high then an unsecured loan may be the only option. But without a job, there is uncertainty over that too.
It can come as something of a relief then to learn that unemployment does not rule an applicant out of a loan, though it is obviously a factor that is part of the assessment process. Approving loans without security is always a risky business for lenders, but the fact is borrowers who have lost their jobs are not necessarily high risk.
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In any case, whether a person is applying for loans that are unsecured or secured, there is a process that allows everyone to be considered, with some lenders willing to approve such loans to those who are without a job.
Realistic Loans
As is always the case when applying for unsecured loans, an applicant needs to accept that they will have to pay a higher interest rate than normal. The reason is simply the perceived greater risk that the lender is facing, with a lack of collateral meaning that there is no certainty of recovering any losses.
When the applicant has no job, the risks involved are understandably higher, so the interest is too. But this should not put anyone off the idea of getting loans without security.
In actual fact, the view of the lenders, especially when the unemployed applicant has a good credit history, is that a loan that is unsecured can play a big role in helping them back on their feet. It is, therefore, a long term investment from their point of view.
Bad Credit Too
It might seem that, should the applicant have bad credit as well as no job, it would only compound the problems they face. But, just as there are lenders that are willing to accept the added risk of approving unsecured loans to those with poor credit ratings, the lack of a job can also be accommodated.
Online lenders in particular are open to the bad credit niche market, with the understanding that many applicants are seeking an opportunity to improve their credit scores. Through loans that are unsecured they can achieve that, while the lenders charge that little extra in interest. The term of loans without security can be quite long, to suit the particular needs of the borrower, but remember that this does mean that more interest is paid over the life of the loan.
Do Not Over Extend
Something that should be avoided when seeking unsecured loans is over extending by seeking too much. With a job lost, the first thing that has to go is the luxurious lifestyle, with many home comforts having to be sacrificed. The temptation is to seek funds to restore the good life, but it is more likely to create further financial headaches.
Applying for loans without security does mean the loan sum will be limited, and without a regular income it is further restricted. With good prospects for finding work again, a large sum is possible, but the trouble lies with meeting the repayments until a new job is secured.
Getting an unsecured loan when unemployed is certainly not a problem, but the long term impact of having a loan repayment to make each month needs to be factored in before applying for one.
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