Sunday, May 25, 2014

Unsecured Loans - An Overlooked Way to Get Through Unemployment

People that are most desperate for money are mostly individuals who have been laid off or fired, i.e. unemployed. Trying to cope with temporary difficulties while looking for another job, they explore all possible avenues to get some money in to cover ongoing expenses. Many are not aware that there are lenders who issue unsecured unemployment loans, just because an idea of a lender providing loans to people with no steady income inflow may seem crazy to most people.

However, there is a growing group of lending institutions willing to undertake a high risk of loaning to unemployed, offering a helping hand during tough times. There are different lending schemes in place aided to assist unemployed borrowers, often requiring no collateral and having relaxed underwriting requirements.

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Unsecured Unemployment Loans Are Quite Expensive

While unsecured loans for unemployed individuals have many attractive features that should definitely be taken advantage of if a financial need arises, they all have an inflated borrowing cost. The interest rates, while tolerable, are significantly higher than of unsecured loans for employed individuals. The logic behind such cost structure is very simple: people who have no steady employment and income pose tremendous risk to lenders, as their repayment ability is hard to predict. Therefore, lending companies try to offset these risks by increasing interest rates on unsecured unemployment loans. In addition, unemployment loans feature less favorable provisions, such as smaller loan amounts and shorter repayment terms.

Unemployment unsecured loans are purely credit-based, as lenders do not require any collateral to be pledged on the part of the borrower. Therefore, people with good credit have better chances of being approved for a loan. While unsecured unemployed loans are also available to individuals with past credit problems, such loans are even more expensive, as lenders face more risk when issuing loans to people without a job and credit issues in the past.

Weight All Pros And Cons Before Taking Out Unemployment Loans

As unsecured loans for unemployed feature high interest and unfavorable terms, a decision to take a loan out should not be taken lightly. If you are one of the millions of Americans who have lost their jobs during recession, you should take all possible measures to cut your expenses before using the services of lenders, specializing in unemployment loans. Under no circumstances, you should take money in form of a loan just to spend it on unnecessary purchases or to fund activities or habits you could easily survive without. Prepare a budget and try to cut your expenses several times before even thinking about taking an unsecured unemployment loan. Not only restaurant dinners and 5-dollar lattes should go, but also spending on clothing, cable, etc.

Once you feel like there is nothing else you may take off your monthly expenditures list, calculate how much you are short each month. Some people may be surprised that they do not need a loan at all, or need a very little cash injection. Once you get that extra cash in form of an unsecured unemployment loan, make sure you spend money wisely. Many people who fail to follow this simple logic find themselves in worse financial shape than they were before taking a loan out.

Shop Online To Get The Best Terms

All those percentage points, fees, and charges written in fine script on your loan agreement contribute a lot to your monthly payment. Therefore, before signing up with any lender, make sure you check the competition and get several loan quotes. The easiest and fastest way to find matching lenders and to get quick offers on unsecured unemployment loans is to look online from the comfort of your home.

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