Loan for the unemployed is often the only way for many people with no fixed income to make expensive purchases. For banks, however, such unemployment loans are associated with a high level of risk because the monthly payments are not guaranteed.
Basic requirements for an installment loan
In order to receive an installment loan from the bank, some important requirements are required. In addition to the age of majority, applicants must also always be able to demonstrate a fixed income that is obtained from employment. The reason for this is that, according to the banks, the monthly loan repayment is only given if the borrower has a fixed income from which he can pay both his living expenses and his credit installment. In the event of unemployment, proof of a fixed and regular income cannot be provided.
- Personal loan – the chances of unemployment are much better through special credit marketplaces, where instead of banks finance a loan to private individuals.
The bank accounts
Before a loan is granted, the banks prepare a household bill that shows both the monthly income and the expenditure. Although it is possible to set unemployment benefits on the income side, unfortunately this income is not sustainable. It is important to the banks, however, that the rate can be paid over the entire term of the loan. However, unemployment benefit is only a temporary benefit. Subsequently, those affected who have not yet found a new job receive only the basic security, i.e. Hartz IV. With this income, loan rates for the loan for the unemployed can then no longer be paid, and bankruptcy threatens.
How unemployment credit is still possible
Some banks do not fundamentally reject the unemployment loan, but do require collateral. Since real collateral such as houses or vehicles is difficult to sell, the banks are demanding co-borrowers who enter into the loan and who are currently repaying it. However, these co-borrowers must have a steady and sufficiently high income to be able to pay the monthly rate. To ensure this, the banks will also prepare a household bill for the co-borrower, also to avoid over-indebtedness.
Who can join as a co-borrower
Depending on the bank, not everyone can join as a borrower. Often only the parents or the children or partners are accepted as co-borrowers. Other banks, however, also accept good friends as co-borrowers. The only thing that is important is that they have adequate income to take out these loans.
Since each bank acts differently in this area, it makes sense to ask the institutions and clarify who can join as a borrower.
Possible risks and disadvantages
Since a loan for the unemployed poses high risks to the lending banks, these loans are often given at high interest rates. It is not uncommon for these interest rates to range from 10-15% pa, which is an additional burden. Due to these high interest rates, the credit rates are often comparatively high or a long term must be agreed, which then also has to bear high credit costs.
The risk of payment in installments should also be taken into account. In the case of unemployment, income is significantly lower than during employment, but many costs remain the same. In addition, income can drop significantly if only the basic security is transferred from the office after the period of unemployment benefit payment. With this monthly income there is hardly any financial scope to cover the credit rate. If the bank is forced to terminate the loan due to arrears, not only does a Credit Bureau entry follow, but often also personal bankruptcy.
Loan offers from the Internet
There are always offers for unemployment credit on the Internet. Since such a loan is only provided by reputable banks with the appropriate collateral, as described above, such offers often have to be described as dubious. Dubious loan offers can be recognized, among other things, by the comparatively high interest rates (more than 15% pa) and the requirement to transfer the processing fee when the loan documents are submitted. In these cases, experience has shown that no loan processing takes place afterwards, so that loan seekers suffer a high level of financial damage, which makes their situation even more negative.
- in addition: credit without Credit Bureau
How to recognize serious loan offers
Banks and credit intermediaries that offer reputable loan offers only charge the processing fee once the loan has been approved. It is therefore important to ensure that the lender makes a free offer and also accepts the documents without fees and carries out a preliminary check. It is common for the borrower to pay the processing fee only when the borrower holds the loan documents. It is often deducted from the requested loan amount even when it is paid out.
Loan for the unemployed is in a few cases a good way to get a loan despite unemployment. However, it should be clarified in advance which monthly charges can also be borne with unemployment benefit and how the repayment of the credit installment can be secured if no new employment can be found after payment of the unemployment benefit. Only from this point of view can it be avoided that an unemployment loan becomes a debt trap, which ultimately leads to insolvency proceedings.