Unemployed loans are small emergency loans aimed at people without work. However, it does not insinuate that you do not need to have income to demonstrate your repayment capacity. Not until you prove your affordability will a lender approbate your application. Since you do not have a regular income source, passive income will be considered to determine whether or not to approve your loan.
Qualifying for loans for the unemployed in Ireland is not a cinch. You should have a decent credit score. Otherwise, you will end up with exorbitant interest rates. Here are the features of unemployed loans:
- Unemployed loans are small loans. The maximum amount of money you can borrow is up to €500.
- These loans are discharged in one fell swoop.
- The repayment length of these loans is not more than a month. They are similar to payday loans.
- They carry very high interest rates as they are targeted at subprime borrowers.
Cautions to take while using unemployed loans
At the time of taking out unemployed loans, you will have to prove that you can repay your debt. As you do not have a full-time job, the following income sources will be considered to determine your affordability:
- Freelancing income
- Pet sitting
- Babysitting
- Walking dogs
- Uber driving
- Lawn making
If you do not have a side gig, unemployment benefits will be regarded as your income. When you lose your job, the first thing you need to do is to apply for unemployment benefits. There are also various other benefits that count as your income, such as a child’s allowance. However, jobseeker’s allowance and income support are not eligible to count as income.
- Unemployment loans are very expensive loans. The APR of these loans can go up to 1500%. Therefore, it is recommended that you carefully research the market and then choose a lender.
- Make sure that you will not struggle to fall behind on payments. You are to pay interest on top of what you borrow. It is likely that you do not have enough cash left to meet other expenses.
- You might get trapped in an ongoing cycle of debt due to poor finances and a high burden of debt.
What are the alternatives to unemployed loans?
Here are the alternatives to unemployed loans:
Social welfare benefits
Social welfare benefits are targeted to those who are on low wages or who have lost their jobs. However, you will have to meet the criteria to be entitled to social welfare benefits, but if you do, you can seek additional support, such as:
- Rent supplement to help with housing costs
- Allowances to help with the cost of heating during the winter months
- Clothing and footwear allowances to help school-going children
- Medical cards whose wages are very low.
You can apply for other benefits too. Visit the government’s website to explore what benefits are available to the unemployed.
Credit unions
Credit unions are non-profit organisations. They tend to lend money to help people tide them over during financial emergencies, but they have acceptance criteria. The best thing about credit unions is that they lend money at relatively lower interest rates than private lenders. If you want to borrow money as an unemployed person, you should compare interest rates from credit unions and from direct lenders.
Friends and family
You can also try to borrow money from friends and family. If you need a small amount of money, they will not be reluctant to be your knight in shining armour. Borrowing from friends and family will not cost you an arm and a leg, as you do not have to pay interest. However, it is suggested that you pay some interest on top of what you are borrowing. This will help maintain the value of their bucks.
Though you do not have to be formal while borrowing from them, it is still recommended that you have a written contract with them. This is essential as it ensures that you are serious about repayments. Your relationship will not be affected by having a formal agreement.
Sell unwanted items
Look around your house and figure out if you have something that you do not need. You might find a lot of items that you do not need at all. There could be worn-out appliances, clothes, furniture, etc. You can sell them on eBay or other websites. Freeing up cash by selling your possessions will help tide you over during emergencies.
0% credit card
If you have a 0% credit card, you can use it to meet unexpected expenses as long as you are out of work. The biggest advantage of these cards is that they come with a grace period. If you pay off the balance in full within that period, you do not have to bear the risk of paying interest.
Smart ways to manage your expenses when you are unemployed
Here are the smart ways to manage your expenses when you are out of work:
- Create a budget and ensure that you stick to it. Make sure that the budget you have created is functional and helps you stretch your money.
- Your budget should cover only essential expenses. Ban discretionary expenses unless you land a new job.
- At the time of borrowing money, ask yourself if it is urgent. Do not borrow if you can make do without it.
- If it is unavoidable, first try to contact your friends and family. Unemployed loans should be a last resort.
The final word
Unemployed loans are quite expensive. You should consider alternatives to them first. Loans for the unemployed in Ireland should be a last resort. Alternatives include 0% credit cards, credit unions, friends and family, and social welfare benefits.
You should try to make the most of your money when you are in a tight spot. Caution is enjoined. Make sure that you do not spend money on frivolous purchases and discretionary expenses.
