Loans for Unemployed UK Citizens: A Clear and Quick Guide
If you were recently let go from your job, thinking about finances can be difficult. How will you pay the bills, pay for the next shop or petrol to get to job interviews? Are loans for the unemployed a positive next step? People find themselves unemployed more often than you might think. In fact, the unemployment rate of the United Kingdom was currently sitting at around 4.2% at the end of 2017.
Finding ways to pay your bills when you are unemployed is not impossible. There are many options available for unemployed people in the U.K. If you know where to look, you can find ways to pay for bills while you search for a job.
Let’s take a look at a few of the options available for unemployed people. This includes unemployment benefits from the British government, loans for unemployed, and more.
Unemployment Benefits from the British Government
Unemployed people in the United Kingdom have a few options for financial help from the UK Government. While none are as ideal as having an income from a full-time job, they can help those in financial need. With these benefits, unemployed people can stay on their feet while they search for a new job. Look over these before turning to financing options that might do more financial harm than good in the long run.
Jobseekers Allowance (JSA) is the primary unemployment benefit for people in the UK. It is available in either an income-based or contribution-based form. To qualify for this benefit, you must be over the age of 18 but under the state pension age. You must also be actively seeking work. Individuals will need to visit the Jobcentre to validate that they are in fact looking for work. It is possible for employed people to receive these benefits if they are working 16 hours or less a week.
Individuals that have not made any National Insurance contributions will receive income-based JSA. JSA is also for people with a savings account that does not exceed £16,000. The entitlement shrinks if the individual’s savings account exceeds £6,000. The payment will also drop if the person receiving the benefits earns income from a part-time job. Payments may also shrink if their partner works more than 24 hours a week.
Payment amounts for single people are £65.45 per week. If the individual has a partner, they receive £102.75 per week. While these payments won’t make anyone rich by any means, that is not the purpose of the program. Instead, it is to help job seekers stay afloat while they look for new employment opportunities.
The second form of JSA is contribution-based. The amount that an individual receives depends on the payments to the National Insurance fund over the previous two years. If they’ve worked full-time and made their National Insurance payments in full, they will receive payments for the 182-day period.
For people aged 16 to 24 that qualify for this form of JSA, they will receive £51.85 per week. People over the age of 25 receive £65.45 per week from this benefit system.
Not every person that is unemployed is able to seek a job. Many people that are either disabled, ill, a single parent, or a caretaker are unable to work. Income Support is for these people. They must be between the ages of 16 and 59 with less than £16,000 in their savings account to qualify. Entitlements will differ depending on each person’s individual situation. Visit your local Jobcentre, and they will work with you to determine how much you may be entitled to.
If an individual is having difficulty only paying their rent, they can apply for a Housing Benefit from the government. As the average price of rent changes, each area of the country will adjust its maximum Housing Benefit level. The amount of benefit that an individual can receive significantly depends on their financial circumstances. If an individual has more than £16,000 in savings, they will not qualify for the benefit.
Is it Possible to Get a Loan if You’re Unemployment?
The short answer is yes, it is possible to secure a loan if you are unemployed. Even so, many people do not advise this option. Most people won’t be able to get a loan from a traditional lender like a bank or other financial institution. Instead, some short-term lenders will loan to the unemployed. However, they must take the proper precautions to ensure that they get their money back.
When lenders decide that they want to lend to someone, the first thing they do is check the individual’s credit report. If someone wants to get a loan from a short-term lender, first they should check their financial reports. You can do this online, and it will show you where you stand. With this information, and after doing some research online, they can better determine which loans for unemployed they may qualify.
What’s in a Credit Report?
Inside of the credit report is a variety of things used to determine an individual’s financial well-being and responsibility.
The first thing that will be in the report is the individual’s credit score. This is a number that is all-encompassing, made up of different factors. The score makes it easy for lenders to tell at a glance whether or not the person is financially responsible. It is calculated using special formulas that take a variety of financial aspects into consideration.
Secondly, the bills that the individual pays are included in the credit score. These typically are utility bills, car payments, or anything that requires a regular payment. They look at these bills to see how likely the person is to pay their bills. In addition, they also want to know if the person pays their bills on time, or if they have ever missed a payment. Missing a bill payment can significantly hurt someone’s credit score. This is why financial reporting agencies include it in the credit report.
What else is included in a credit report?
Also included on the credit report is the amount of credit available to the person. This is also known as a person’s “credit line.” If someone has a large amount of credit, it usually means that they are more responsible than someone that doesn’t. There is a trick to this, however. Let’s say someone starts with 10,000 of credit and uses 80% of it. Another person has 2,000 of total credit and only uses 5%. The second person would appear more financially responsible. This is because they don’t use more than they need, and don’t carry heavy debt.
Finally, the credit report will also include the credit applications that a person has recently made. When someone applies for multiple credit cards or loans throughout the year, it will ding their credit score. Applying for lines of credit in a short period, it usually means that they aren’t doing well financially. A lender who sees this, may assume that the person does not have a significant amount of cash available.
Are there loans for unemployed for people on benefits?
Loans for unemployed are for everyone, including people that have received government assistance to help in their financial circumstances. If someone is currently on government benefits, to receive a loan, they will need to meet a few distinct qualifications. These requirements are to ensure that they can pay back their debts and remain financially responsible.
For someone to qualify for an unemployment loan, the following factors will affect their chances:
Firstly, the person applying for the loan must have received benefits for the minimum period of 26 weeks. This must happen before they can apply for the unemployment loan from a lender. This ensures that they have maxed out their benefits from the government and need other financial assistance.
The benefits that the individual could have received include Jobseeker’s Allowance, Housing Benefits, Disability Benefits, Income Support, or pension credit. The type of benefit that the person received will likely affect the kind of unemployment loan that they can receive. The benefit type will also affect the amount they may be approved for by the lender.
Credit history will play a role in the lender’s decision to lend to an unemployed person. As mentioned earlier, it is always best to look at your credit history beforehand. You want to ensure that you can meet the minimum requirements that a lender might require. Lenders want to know that the people they lend money to can repay the loan amount plus interest. Their role is to make money through this interest. If a person has a history of missing bill payments, they are riskier than people that do pay their bills.
Lenders will want to know if the person applying for the loan has any source of income. If they don’t, they are a risky borrower. Before a person applies for a loan, they should think about the sources of income they have. This will show a potential lender that they do have some money to repay the loan.
Why would someone on benefits need an unemployment loan in the UK?
People in the UK need loans for unemployed for a variety of reasons. Some come to lenders to help pay for their daily necessities. Others choose a loan when an emergency arises like a car repair or medical bill. If someone is on government unemployment benefits alone, they might not receive enough to cover their expenses.
A loan is a supplement for people to help them cover more of their expenses while they look for work. Although it is difficult to secure loans for unemployed, there are a variety of options that can improve someone’s chances. There are a variety of lenders in the UK that work with people in desperate financial circumstances. Even if they’re receiving benefits, if they can meet the minimum requirements they might qualify.
A Few Things to Consider
Many of the short-term lenders in the UK won’t offer loans for unemployed. It can seem difficult to hear this news, but it is true. Lenders want to lend to people they know within 99% certainty can pay the money back.
When someone is unemployed, loans for unemployed may be difficult to pay back. Without an income stream, finding the money is a challenge. While some lenders will take collateral for a loan, you should be careful. Things like your car or prized possessions might be necessities in your daily life. If you were to lose them due to non-payment, it would make the situation worse.
So, what can unemployed people do if they can’t get a loan for unemployed?
One of the options is to visit a local Jobcentre. They will help you find job placements and set you up with benefits. They have all of the information you need to know about UK unemployment benefits. Many people have gotten themselves out of a tough situation thanks to these benefits.
The most important thing to remember is that there is a way out if you search. If you are seeking a loan for unemployed, there are better options. Don’t get yourself in more financial trouble trying to improve your situation. Stay focused and make sure that you maintain a positive mind set.
If you are unemployed in the U.K., there are a variety of options to help you back on your feet. The government offers unemployment benefits to every citizen of the country. There is no shame in collecting this. You are entitled to these benefits if you have paid your taxes or will in the future. There’s nothing wrong with asking for help, and we can all use financial assistance from time to time. Just be careful, and make sure that you are making smart financial decisions.