It is undoubtedly one of the most difficult life situations: Unemployment! Especially in financial terms, unemployment does not only mean a general restriction, but also in terms of the possibility of further, even if only temporary, financial bottlenecks to take out a loan. As a rule, banks do not grant loans to the unemployed – or do they?
It is often very difficult for the unemployed to get a loan. As a rule, the unemployed have no reserves or possessions that would serve as collateral for the lender. The fact that they therefore often grant loans to the unemployed at particularly high interest rates is therefore understandable from their perspective on the one hand, and on the other hand the cat bites its tail a little bit. Because higher interest rates can additionally weaken the repayment power of an unemployed borrower. First and foremost, this can have serious consequences for the borrower, but secondly, of course, it can also have serious consequences for the lender, who could ultimately lose even more money than if he had granted the loan at average interest rates. Nevertheless, for all the difficulties that unemployed people face when applying for credit, it is not impossible. These are the most important things that unemployed people should consider before taking out a loan:
1. Think about the credit thoroughly
In the situation as an unemployed person, a financial bottleneck can quickly arise. The problem is that if you try to bridge this gap with a loan for the unemployed, the precarious situation can become even worse. After all, the meagre income will no longer be available in the foreseeable future, but the liabilities will be, thanks to repayment instalments and interest. It is therefore imperative that one should thoroughly examine whether one can somehow manage without a loan.
If, for example, the electricity, water or heating bills turn out to be unexpectedly high, financial support is available from the employment agency. And if that is not enough, the utilities generally have no problem paying in instalments. Those who do not ignore their liabilities but confront them and openly communicate their situation to the debtor can usually rely on their goodwill and avert the worst. A loan would then not be necessary at all.
2. Take the first step to the bank
If no agreement with the debtor is in sight, the very first point of contact should be your own house bank. Granted, it is unlikely that a bank will grant a loan if you cannot provide proof of purchase. Nevertheless, going to the house bank protects against fraud and rip-offs. And better than the Internet. This is why unemployed people should first of all talk to their bank advisor. Especially when it comes to a loan for a planned self-employment. Banks are often much more willing to give than with personal loans for the unemployed.
3. Compare wisely on the net
If the bank rejects a loan application or is not an option from the outset, unemployed people should inform themselves in detail on reputable sites and comparison platforms about which providers grant loans to unemployed people and compare the conditions. They have the best chances of obtaining so-called mini loans, which are often granted by specialised providers to people in exceptional economic situations, because the loan amount is usually only a three-figure sum.
4. Seek joint credit or guarantors
If the approved sum of a mini loan is not sufficient, the unemployed would do well to look for a guarantor in their private environment who will take on the role of a debtor to the bank in their place. A joint loan with a partner can also be an option. In this case, both parties would sign the loan agreement and both would be liable accordingly. In both models of these alternatives for loans to the unemployed, the second party must be able to prove a regular income.
5. Consider alternative loans
Depending on the loan amount, unemployed people can save cash by taking out loans from friends, family members or colleagues. Such a personal loan is usually much cheaper than a bank loan for the unemployed. Even a look at so-called peer-2-peer platforms can do no harm. In addition, loans are granted by private individuals who act as lenders there. However, the providers themselves choose whom they entrust their money to – unemployed people must therefore be able to sell themselves well in order to convince the lenders of their financial need.
A third alternative is the employment office, which under certain conditions grants loans to the unemployed. The extent to which someone is creditworthy for the employment agency must be clarified individually. And last but not least, especially for smaller amounts and shorter periods of shortage, pawnbrokers can also be a contact point if you want to take out a loan as an unemployed person. The only requirement for this is the one or other property of value.