Loans or loans for the unemployed are financial products that you usually do not find in the banking sector. An unemployed client is a risky client for a bank or large financial institution and because he has no job and has a very low income. It is therefore not guaranteed whether he will be able to repay his loan on time and without problems. Unemployment loans are therefore almost exclusively a matter for non-bank financial institutions. This is a loan without a purpose, so the client is not obliged to prove what the loan will be used for. At the same time, the company does not request a clean record from the bank register or proof of receipt.
The applicant for this type of loan must be older than 18 years and usually younger than 65 years. The entire settlement of the loan is therefore conditioned only by proving the applicant’s identity card and one other identity card (passport, driver’s license, etc.). At the same time, some companies check personal data, such as where they live and change it if necessary.
Interest rate on loans for unemployed
The maximum amount borrowed is around 50,000 without the need to secure a loan. For higher amounts, it requires the liability of real estate, or other property (car, household equipment, etc.). As a rule, due to the riskiness of clients, this type of loan is compensated by a high interest rate. However, it is difficult to find out the exact amount before signing the contract, because most companies determine the amount of interest based on the individual needs of the client. In any case, be prepared for significantly higher interest than for loans with proof of income.
As well as interest rates, the maturity of the loan is determined individually. Its minimum period is on average around one month, the maximum possible period is around 6 years. The amount of the monthly (weekly) payment is also determined individually. As a rule, the higher the loan amount and the longer the maturity period, the higher the interest rate.
Study the conditions of loans for the unemployed
Almost all companies unconditionally require the exact fulfillment of the repayment schedule. If the client does not pay the installment on time, he will face relentless sanctions and other inconveniences that are associated with it. Thus, although the interest on this loan is fixed, it can still climb to several times its value due to the outstanding installment. In any case, you can prevent this by carefully studying the contract before signing it.
Focus primarily on the interest rate, ie whether it is defined in the contract as weekly, monthly or annual. Also check the repayment period, its schedule and also the amount of repayments. Get acquainted with the amount of fees related to the settlement of the contract, such as an estimate of assets (in the case of a guarantee), a fee for processing a loan, etc. Last but not least, get acquainted in detail with the penalties for late payment and also with the fees associated with any early one-time repayment of the loan.
Advantages and disadvantages of loans for the unemployed
Unemployed loans have many more disadvantages than advantages. If a potential applicant finds himself in such a difficult situation that he cannot solve it with another loan, he should think carefully about how much he needs and how quickly he is able to repay it, and certainly not unreasonably increase or prolong these factors. The fact remains that if the client does not have a regular monthly income, logically he has nothing to repay the loan. Even before signing the contract, there is a risk that the client will have a problem repaying the loan. In extreme cases, this can lead to the execution of property and thus a far greater problem than at the beginning of the application for a loan for the unemployed.