Loans for People who are Unemployed - How Payday Pixie Can Help You
The level of unsecured debt as a share of household income has increased markedly in recent times, with consumers having access to a wider range of lending options than ever before.
However, the vast majority of these options have been made available almost exclusively to those in employment, as individuals who have access to a monthly salary boast a lower risk profile in the eyes of lenders.
Fortunately, the financial landscape has changed significantly since the great recession of 2008, with a number of short-term and unsecured lending options now available to people who are out of work and carry a bad credit history.
So, if you’re living in the UK and are looking to resolve some financial difficulties whilst searching for work, it’s now easier than ever to secure a short-term loan and begin the process of managing your money issues. But what exactly are the options available, and how should you go about securing a loan without work? We’ve broken this down for you below, so hopefully you can make an informed decision about your finances whatever your circumstances.
It’s Hard to Get a Loan When You’re Unemployed - Here’s How We Can Help
If you are unemployed and in need of a loan, your first step is to determine which type of borrowing best suits your circumstances.
We offer a range of options here at Payday Pixie, each of which enables you to borrow variable amounts whilst adhering to different terms and conditions. Here’s a brief introduction into these options, and a look at which one may be right for you.
You’ve probably heard of payday loans, which are essentially short-term lending vehicles that can be used to cover the cost of an urgent and unexpected financial problem.
This can pertain to everything from one-off bills to emergency home repairs, but despite its name this loan is available to everyone regardless of whether they have a full-time job, work on a part-time basis or are completely unemployed.
However, you’ll need to demonstrate that you have at least some form of sufficient and regular income into your account, whether this takes the form of job-seekers allowance, disability benefit or any other type of frequent payment (we’ll go into this in a little more detail below).
Once lenders see evidence of this and you prove that you’re capable of making a repayment in full and on-time, they’ll be willing to lend you a fixed sum of cash over a four-week period or longer.
When requesting a payday loan from us, there are a number of other criteria that you’ll need to satisfy before being approved. These include:
- You must be a UK resident (UK citizenship is a must as a minimum)
- You must be 18 years or older to apply for this type of loan
- You’re required to have a valid and functional bank account
One of the biggest benefits of payday loans is that you’ll receive your capital quickly and within 15 minutes of your application being approved in most instances. Just be sure to enter accurate details when completing your application, as this will ensure that your request is processed as quickly as possible.
Three Month Loans
At Payday Pixie, we also offer borrowing terms of up to three months to applicants who are unemployed.
This includes the option to repay the total amount borrowed over a three month period, as you look to spread the cost of a payday loan and make this more manageable in difficult financial circumstances.
You’ll need to meet the same eligibility criteria to qualify for this type of loan, whilst the total interest repayable will also increase in line with the amount of time taken to complete repayment.
Obviously, the accessibility of these loans and the speed with which applications are processed can provide much needed assistance for anyone who’s out of work and facing a short-term financial crisis.
You must always look to borrow responsibly whether you’re in or out of work, however, and payday loans are not designed for individuals who are looking to compensate for a shortfall in income.
Similarly, you must always strive to borrow an affordable and manageable amount of cash, whilst factoring in the interest accrued into the total amount repayable. By keeping these factors in mind, you can make informed decisions that respect your circumstances and help you to avoid the cycle of long-term debt.
Unsecured Short-term Loans
We also offer unsecured short-term loans to applicants who are unemployed in some instances.
In this instance, you can borrow a slightly larger sum of money and spread the cost of repayment over a period of up to six months, without having to offer any kind of collateral to the lender.
This represents a viable short-term lending option for people who are unemployed, as it enables them to borrow a reasonable amount of cash without requiring them to risk their hard-earned property.
This is an important consideration in instances where you’re out of work, as you don’t want to risk your long-term security in the bid to secure short-term funding.
What this means, however, is that the interest rates associated with short-term and unsecured borrowing are relatively high. This is because lenders look to mitigate their risk in instances where your loan isn’t secured by collateral, as there’s no obvious way for them to recoup their money if you fail to make the agreed repayments.
However, if you’re spreading the repayment of your short-term loan over a period of between three and six months, you may be able to borrow slightly more than you would through a payday loan.
More specifically, you can theoretically borrow up to £2,000 with Pixie Payday, whilst these funds can be used to achieve a number of financial objectives.
Regardless of your job status, you’ll also have to meet the same criteria associated with payday lending when applying for a short-term loan.
So, not only must you be a UK citizen and aged 18 years or older, but you must also have a fully functional bank account in which to receive the funds.
In many ways, these accessible short-term lending options are variations of the same product, with subtle differences such as the size and the duration of the loan making it easier to find the best possible solution to your financial issues.
So, be sure to review the full range of options on offer, so that you can make a selection that suits your own personal circumstances.
Does Being Unemployed Limit Your Borrowing Options?
Whilst you can access a range of loans options through Payday Pixie as an unemployed individual, there’s no doubt that being out of work can restrict your borrowing options.
After all, lenders can review individual loan applications at their own discretion, whilst reserving the right to refuse credit in instances where you’re out of work and unable to demonstrate any kind of regular income.
At the same time, your employment status will usually be considered in line with a number of additional factors, including your income streams, credit history and overall credit score.
However, the fact remains that you can still secure a loan in instances where you’re unemployed, so long as lenders are assured that you can realistically repay the amount borrowed within the precise terms of the agreement.
The question that remains, of course, is what alternative income streams are likely to be accepted by lenders looking to approve your application? Here’s a brief breakdown of most widely accepted forms of income:
- Job Seekers’ Allowance or People on benefits: If you’re looking for work, the chances are that you’ll be in receipt of job seekers’ allowance/benefits whilst you conduct your search. This represents a reputable and viable form of income, which some lenders may deem to be acceptable when you apply for a loan.
- Pension Funds: If you’re older and have been made redundant or unexpectedly lost your job, lenders may accept your pension funds payment as a viable income stream. You’ll need to be in receipt of regular pension repayments, of course, whilst you must also borrow an amount that can be repaid within the time frame.
- A Guarantor’s Income Stream: In the case of guarantors or co-signed loans, you’ll apply for unsecured funds by nominating someone else to make payments in instances where you’re unable to. This minimises the risk for lenders and may ultimately incentivise them to extend a loan offer to unemployed applicants.
So, whilst being unemployed may restrict your borrowing options in some respects and the eyes of certain lenders, it’s now easier than ever to secure short-term loans with or without full-time employment.
Our Representative Example
When borrowing funds through a direct lender or a credit broker such as ourselves, you should always keep your eyes peeled for the ‘representative example’ associated with financial products.
This is a term used widely in UK financial advertising, with its purpose being to show consumers the full costs associated with a particular product or loan.
The aim here is to provide transparency to consumers, whilst enabling them to understand the full cost of a loan regardless of its duration or the precise amount borrowed.
For example, let’s say that you apply for a loan amount of £200 over a period of 10 day. When applying through Payday Pixie, you’ll pay interest of £9.89 on your borrowings during this period (or £0.98 per day), creating a total repayment of £209.89 over the course of the agreement.
This affords borrowers with an accurate insight into their borrowing, which in turn enables them to make informed decisions.
It’s also important not to confuse the representative example with representative APR, as the latter is annualised and may not provide an accurate reflection of your short-term borrowing liabilities.
What Should I Do if I’ve Been Refused a Loan in the Past Due to Unemployment?
As we’ve already said, whilst it’s possible to secure a short-term loan if you’re unemployed, this process is far more challenging than it would be if you had a job.
The lending market has also evolved considerably over the course of the last decade, however, so even if you’ve been refused credit in the past due to your circumstances this doesn’t mean that you can’t secure a loan in the future.
After all, online lenders are far more likely to lend money to applicants who are unemployed than banks and building societies, whilst the sheer range of financial products now on the market make it easier than ever to achieve your goals.
Of course, much will also depend on the reasons why your previous application was refused by lenders.
More specifically, those of you who failed to demonstrate any form of regular income will need to correct this going forward, whereas anyone attempting to secure an unemployed loan with a bad credit history may also need to target specialist lenders and products.
The key is to review and understand the reasons why your previous application was refused, whilst also striving to demonstrate to ability to repay loans and limiting your applications to lenders who extend credit to customers with a bad credit history (where applicable).
We can help you to achieve these objectives at Payday Pixie, thanks to our industry knowledge, range of lending options and key informational resources.