What Are The Types Of Unemployment Loans And Who Can Get Them?
There are two important types of unemployment loans. The first one is the unsecured loans that are being provided for unemployed people. The other type of this loan is the secured loan. As the names of the loans indicate, these loans are provided for a person who is not working in a regular job. It is a type of loan that can be used by any person who is in between jobs, who has lost a job and is looking for another job and also for those who are yet to get their first job.
Unsecured Unemployment Loans
This is the kind of loan that has a very high interest rate on it. The reason for this is that a person who is unemployed will find it very difficult to repay the money. The rate of defaults in such loans is very high. Because of this risk, the lender will be very careful and try to hike the interest rates to very high levels, so that the risk is minimized.
The other aspect about the unsecured unemployment loans is that the lender will not be able to provide the loan to you on most occasions, if you do not have a cosigner. A cosigner is a person who signs the loan application form telling that he will take the risk of non-payment upon himself and will repay the money in case the borrower does not repay the money. Such a loan becomes less risky for the lender and so any unsecured loans that have a cosigner have a lesser interest rate.
The unsecured unemployment loans are available to any person who has a good job history. There are many people who will be able to get good jobs and are in between jobs when they are searching for the right kind of jobs. This loan is designed to help such people tide over their regular monthly budgets. The loan is much more easily available to a person who has been in a steady job for many years. A person who has been jumping from one job to another and has also had long periods of unemployment will not find it easy to get this kind of loan.
Secured Unemployment Loans
The secured unemployment loans are the ones that are easily available. Here, there is some security for the lender and this minimizes the risk of nonpayment of the borrower. The interest rates on these kinds of loans are also lesser. So, this is one of the common loans that many people opt for. The amount of money that is given out as a loan will not be very high, but it will be enough to sustain the individual till the person gets another job.
The advantage of the unemployment loans that are secured is that the rate will be very less when compared to the unsecured loans. Also, the repayment period is spread across many months and this will provide enough time for the person who has borrowed the money to obtain a job. There are some loans where the repayment period is spread across about 6 months. This gives enough time for the borrower to repay the loan amount with interest.
More than the credit score of the individual; the employment history plays a major role in approval of the loan. On the other hand, when the credit score and credit history are good, it makes it easier for the lender to approve the loan. So, whatever the amount that needs to be borrowed by you, it is important that you find adequate security for the loan so that the lender will provide the loan to you easily.
The advantages of the unemployment loans include the fact that the processing time is very less. So, if you are out of a job without much prior notice, it does not matter because you will be able to tide over the immediate financial needs with the help of this loan. It is also helpful for those who have never been in a job and are searching for their first job. These people either need a cosigner or should have some other security for being able to get the loan. Also, the credit history of such people plays a major role in them obtaining the loan. The unemployment loans are very useful for all people who have lost their jobs as they will still be able to lead their normal life.