Common sense says the last thing you should do if unemployed is take on loans which are going to take money to service and cover the interest charges. Nevertheless there is now a disturbing trend in the UK as sub prime lenders look to target the unemployed with specially named unemployment loans. At a time when financial struggles are at their hardest one lender issuing such loans advertises as thus: “Do you want to fetch funds for meeting certain important needs and desires.” Surely those who are unemployed can appreciate that the time is not right to be taking out high interest loans to buy their desires.
Unemployed loans bypass ones credit score: CCJ’s, IVA’s and payment arrears are no bar to securing a loan. The loans can be utilized for whatever purpose and are advertised as being available for weddings, vacations, buying a car, home renovations and even buying a home. It is very doubtful that anyone who is unemployed and has bad credit would ever find a mortgage lender willing to extend a mortgage in such circumstances but no doubt there will soon be a payday loan type predatory lender advertising mortgages for the unemployed with bad credit.
Both secured and unsecured unemployment loans are available in the UK, but obviously the interest charges will be much higher on unsecured loans. Unsecured unemployment loans tend to be available from £500 to £25,000 over a period of 1 – 10 years, whilst secured ones can be between £25,000 and £75,000 over a 10 – 25 year period. Most unemployed loan providers advertise 100% acceptance rates and no guarantors required.
Some lenders target a different type of loan for the unemployed, known as benefit loans. These work in the same way as pay day loans and need to be repaid the day the borrower receives their DSS benefit payment. These benefit loans are targeted towards those on benefits who are physically and mentally challenged, which rather raises the question if those who are indeed mentally challenged have any concept of the type of loans they are obtaining and repaying from their government benefit payments.
Benefit loans are typically available from £30- £1000 and work in the same manner as pay day loans. Credit is not an issue and bad credit is no bar to obtaining a benefit loan. However applicants must have a current bank account plus savings of at least £500 which can be used as security. Quite why anyone with personal savings would be applying for a pay day loan by another name, and paying high interest for the privilege, remains a mystery which defies common sense.
The last thing the unemployed should be doing is miring themselves further into debt with expensive bad credit loans. Those who take the bait and obtain them are unlikely to ever find themselves released from debt unless they can secure gainful employment again.