Unemployment & Loans

Just as there are specialist companies who lend to the self-employed or to those with poor credit ratings, there are a few lenders who specialise in lending to the unemployed. As is the case for others seeking credit under difficult circumstances, if you are unemployed you will typically face problems when applying for credit. For example, you may not qualify for a large loan amount, you will probably face high interest rates on any amount you are granted, and lenders will almost always ask for some collateral to compensate for your lack of regular income. Collateral is required to take out a secured loan, and acts as a guarantee for your lender that they will be able to sell your asset to pay off the debt, if you are unable to keep up repayments. This collateral will usually be your home if you own one, and it is important that you think very carefully before putting your house at risk: if you cannot meet your repayments your house will be repossessed.

However, if you are only looking to borrow a small amount for a short time until you are employed again, an unemployment loan may be an option. Before taking out an unemployment loan it is advisable to visit a debt counsellor, and as with any loan, make sure you shop around for the best deal.

If you are entitled to unemployment benefits then you may even qualify for a crisis loan from the UK Government (see Loans from the Government and Crisis Loans).