Loans for the unemployed can be tough to figure out. If you’ve never attempted to get a loan before, there can be even more to learn. If you have attempted to get a loan, then you should know what to expect. However, loans for unemployed people, work a little bit differently. There are essentially two types of loans available to unemployed people. Secured loans and unsecured loans. Ninety nine percent of these unemployment loans are also going to fall under the personal loan category. These differ from things like unemployed car loans or even unemployed student loans. That’s a whole other ball of wax.

But first let’s take a look at what happens when you get a loan. Traditionally, you would contact a lender of some kind (a bank or a credit union) and you meet with them and fill out a lot of paperwork. One of the first things the bank will want to know is how much you want to borrow. Don’t be surprised if the lender asks for your social security card, address and where you work and how long you’ve worked there. Expect to wait a couple days to get an answer. What they will do is run a check on your credit to determine how much of a risk you present. They take the amount you want to borrow, how much you make and what other liabilities you currently have, in order to make a decision. If you are approved, then another meeting is usually arranged to sign the paperwork and agree on the term or length of the loan. In some cases, it may be advisable to get what’s called a ‘co-signer’.

A co-signer is simply someone else who would be able to pay off the loan if you become unable to. In some cases, it might be your girlfriend or wife or a family relative that is willing to help out. A co-signer is also required to fill out paperwork that includes their social security number, address and their employment information. Some institutions may also require pay stubs from your most recent check. The co signer may also be required to provide this.

Unemployed loans or loans for the unemployed are going to be a bit different. Since you have no steady income stream, you’re going to have to get creative. A co signer that has decent credit might be required for you to get approved for the loan. The bank or credit union is not going to consider your unemployment check to be consistent income. This is where a co signer can make a big difference.

When you initially talk to a bank or credit union about the loan, it will more than likely be classified as either an unsecured loan or a secured loan. Here’s the difference. When you fill out the initial paperwork, the credit union will want to know what assets you currently possess. If you have a car that you own, this is an asset. If you own your own home, this is an asset. Anything that can be used as collateral against the possibility of you defaulting (failing to pay) on the loan, can be used as collateral. This is a secured loan. Secured loans typically have lower interest rates than unsecured loans. This is good. So if you have any collateral at all, do not forget to list it on the form.

An unsecured loan is essentially a loan with no collateral. It is more risky for the lender for several reasons. The biggest being, if you fail to pay the loan off, they have nothing to recoup their investment on. Credit cards are typically all, unsecured loans. As a result, almost all the time, the interest rates are higher. Sometimes a lot higher. The terms of an unsecured loan are also typically, not as great. Personal loans for the unemployed, in which an unsecured loan is used, may typically include late fees or other fees if you default somehow.Some of the more riskier types of unsecured loans include loans called payday loans.

Payday loans work like this. The lender gives you an advance on your paycheck and takes a percentage out for themselves. So, if your paycheck is usually $500 a week. The lender may give you $450 or even $425.

Loans for the unemployed are a little more difficult to obtain because the income is not guaranteed for the lender. If you have collateral, use it. If not, then get a co signer. If you can’t get a co signer then your only options would be contacting banks or credit unions about unsecured loans. Credit cards may be an option but be aware of their terms. Payday loans would be an absolute last resort in my book./* FloatRight,336×280, created 3/19/10 */

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