Job loss often comes as a shock even though, at the back of your mind, you know that your job is not permanent. Employers need only a second to send you an email about your layoff and make you feel like you have been thrown in at the deep end.
Unemployment is inevitable. Unless you land a new job, you should be able to fall back on your savings. Financial experts suggest saving at least six months' worth of your living cost. Unfortunately, many people find it hard to salt away enough money to stay afloat during such kind of emergencies.
Many people take out emergency loans for the unemployed in the UK to cover emergency expenses when their savings fall short, but applying for these loans is not so easy. Bear in mind it is vital to have money to prove your repayment capacity at the time of borrowing money. So, how will you qualify for a loan when you do not have a full-time job?
Tips to qualify for unemployment loans
When you lose your job, you should immediately apply for unemployment benefits. They can help you get by unless you land a new job. You will have to meet the eligibility criteria to receive these benefits. They will serve as your income when you need to borrow money during financial emergencies.
Applying for unemployment loans is not so difficult. The good thing is that you can apply for them online by going to the site of a lender. You simply need to fill in the loan application form. Make sure that you provide all details accurately. This is because your lender will consider whether you can actually afford to pay back the debt on time based on the financial details you provide.
Since these loans are small and you are taken out when you are unemployed, lenders will not ask you to submit your bank statement, so the onus of taking out an affordable deal is on you. Unemployment benefits will be considered your income. Be honest while providing the details of these benefits. If you are receiving any other benefits like allowances, do not forget to add them. They can be considered your income.
The borrowing sum will be paltry. However, if you come across big emergency expenses, these loans might not be sufficient. Here is how you can increase your chances of applying for these loans:
- Have a side gig
Unemployment benefits may not be enough for you to borrow money. Since these benefits do not consist of large sums, the lending amount will be quite small. Therefore, it makes sense to have a side gig; you should always try to have a part-time job so you can use money from your freelancing or side gig to borrow money.
When a lender finds that you have a consistent flow of income, they will likely entertain your application. On fact, the larger sum could be lent. It is not necessary to have a side gig. Other passive income sources include income from dividends, interest, rental income etc.
However, it is always suggested that you do not use your savings to apply for easy loans in the UK. As a result, you can end up falling into debt.
- Borrow little money
It makes more sense to stick to a smaller sum when you are unemployed, even if you can borrow more by clubbing your passive income sources. You never know how long it will take to land a new job, and it means until then, you will have to rely on your savings. You will most likely fall into your debt, and as a result, you will end up taking a toll on your credit score.
Make sure that you use an online loan calculator because this will help you know how much it would cost you. Remember that this is an estimated cost. The actual cost will be higher because of the lender's fees and associated charges.
Other tips to keep in mind
- Before you apply for these loans you should create a budget so you know how much you can afford to pay as debt interest without compromising on your essential expenses.
- Make sure you do not have any other debt including credit card bills. It can be tough to challenge all of them together.
- Check your credit score because a bad credit rating will cost you very high-interest rates.
The final word
You can apply for emergency loans when you are unemployed, but make sure that you do not borrow a large sum and have enough income to pay it back. Your unemployment benefits can serve as part of your passive income sources.
Applying for these loans is very easy. You just need to fill in the application form online. Your lender will make the decision without further ado and transfer money to your account.
Description: To apply for emergency loans when you are unemployed, you will have to prove your repaying capacity. Fill in the form online, provide your financial details and get money the same day.
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