Unemployment loan is a slang term for loans granted to unemployed borrowers, but some financial institutions also use the term as a product name. They mostly require the provision of a guarantor when lending, in some cases the unemployed can also get a loan without a guarantee.
According to the usual definition, unemployed is anyone who involuntarily works less than fifteen hours a week for a fee and is available to the labor market by notifying the employment agency accordingly. Lending without providing a guarantor also increases legal certainty for the bank, since in many cases the legislator considers a guarantee to be immoral. This includes cases in which the credit institution had to recognize that the guarantor had undertaken financially or accepted the guarantee as a result of an emotional predicament.
Opportunities for unemployed to lend
Unemployed loans are provided by financial institutions and insurance companies if the repayment of the loan is secured by means other than sufficient income or a guarantee. This applies primarily to borrowing in the pawnshop, where the pledge is the only and sufficient loan security. Furthermore, a life insurance or pension insurance that may be available can be loaned out by the unemployed.
In the case of government-funded insurance contracts, however, this is not possible without losing the allowances received. Relative unemployment loans without guarantors are also often granted. In this case, a transfer must expressly state that it is borrowed money. In other cases, the job center counts the amounts received as supposed income. When arranging installment payments in the mail order business, the demand for the employment relationship is unusual, so that the unemployed can in principle take out a loan through a partial payment agreement.
Unemployed loans without a guarantor can also be successfully applied for on websites for arranging loans between private individuals, especially since many of the private lenders registered there are guided by social criteria when making their decisions. The unemployed agree on the longest possible terms and correspondingly low credit rates so that they can pay them as agreed.
Sometimes the job center helps
The ideal contact for unemployment loans without guarantors is the job center. The precondition for the granting of loans by the employees of the employment agency is that an applied for loan is used for urgently needed purchases. The second reason for the lending by the job center is the forthcoming start of work, if this involves costs.
In this case, the Office can also finance a move or a used car that is urgently required for the desired job. It is advantageous for the unemployed borrower that the loans granted by the job center are to be repaid without interest and in small monthly installments.