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If you are unemployed, taking a loan can be a challenge. Many lenders prefer clients that have regular income to pay for their loan amortization. Recently, the lending industry requires the finance sector to not to extend loans to people who have no steady income, and these are the unemployed. However, unemployed residents of the UK can now borrow money from lenders that have the unemployed as their clients. To qualify for these types of loans, a borrower must be 18 years old or above, and he must be a resident of the UK. You must also have a bank account through which the lender can collect payment except for the doorstep loan in which all transactions happen face-to-face.
Borrowers with a bad credit history or no credit history at all can apply. If they pay their loan without missed or delayed payments, they could start building a good credit history. With a good credit record, borrowing money in the future would not be difficult.
How can the jobless pay them back? In the UK, even the unemployed have an income. Here are several affordable loan options for the unemployed in the UK.
Guarantor Loans
Even if you are unemployed, you can take a guarantor loan of up to £12,000 that you can repay from 1 year to seven years. With someone to take responsibility for your loan if you cannot pay anymore, lenders are willing to grant you a credit. However, it is hard to find someone who would willingly help you get a loan. Asking your best friend, parents, siblings, or relatives to be the guarantor would give you a higher chance of finding a guarantor.
Homeowner Loan
Unemployed residents of the UK that own their home can apply for a homeowner loan. In this type of loan, you put up your house as security for the amount that you would borrow. Because your home serves as your security, you can borrow between £25,000 and £250,000. With this type of loan, you could pay for significant expenses through a loan even if you are unemployed. However, you must pay back the amount that you borrowed plus interest rate or lose your home to the lender.
Payday Loan
A payday loan is usually for those with regular employment. Lenders would usually deduct the amount due for the mortgage every payday. In the UK, even the unemployed can get a payday loan. In this case, the lenders can collect payment every time the borrower receives the check for the borrower’s benefits from the government. You must show proof that the benefits that you receive can cover for your loan payment.
Doorstep Loan
A doorstep loan is an old way of lending and borrowing money wherein the transaction is face to face. Borrowers may apply online, but the lender sends his people to visit the applicant in his home. The representative of the lending company explains the terms and conditions of the loan before letting the borrower sign the form. The agent gives the money to the borrower directly. The person would also visit the borrower to collect a payment, which is weekly. Doorstep lending is legal, and there is a governing body that regulates their operations, especially the interest rate and penalties.
If you are a resident of the UK, unemployment is not a hindrance to taking a loan. All UK citizens earn an income in the form of pension for retirees, unemployment benefit, child support, child care benefits, student finance for families with children in college, and disability support. As someone with an income, you are qualified to borrow money.