$5,000 Unemployment Loans: Securing Loan Approval With No Income

On the surface, it seems ridiculous, but there are lenders who are willing to provide loans to the unemployed. Surely this is nonsense, since the unemployed obviously have no source of income, but the fact is that it is possible to get a $5,000 unemployment loan when you need it most.

How can this be possible? Well, let’s be honest and admit that $5,000 is not a huge amount of money. It means lenders can easily create terms that benefit them but in a way that, in the event of a borrower’s default, doesn’t affect them too much. Getting jobless loan approval relies on the same faith that students get.

Lenders will offer even unemployed applicants a chance to get a loan, because there is a strong chance that the unemployment will be temporary. Therefore, providing affordable installment loans is considered a viable decision rather than a major risk.

Why are the unemployed accepted?

So why are the unemployed accepted by lenders? Well, lenders are not ignorant of the risks involved and are not willing to give loans to everyone who is out of work. But there are some cases where the chances of default are pretty low, so giving a $5,000 unemployment loan is fine.

There are two different types of unemployed. The long-term unemployed have been out of work for several years, so the chances of them finding work again are very slim. This type of unemployed person will not be considered for a loan.

Those who can expect to be approved without employment will have been recently laid off, but it is understood that at least 6 months will have elapsed before the application can be submitted. The reason an affordable installment loan may be offered is that some form of employment is likely to be found in the next 12 months.

Unemployment Loans Explained

If approval of a $5,000 unemployment loan seems counterintuitive, understand that the loan itself is used to stay on top of existing loan payments and bills. For this reason, it is understood that the loan is a provisional resource.

However, it is the fact that the borrower is still considered highly employable that attracts the lender’s attention. It is similar to a student loan where the loan is made with the faith that the borrower will graduate and get a good job.

Similarly, lenders have enough faith to grant jobless approval because the borrower will get a new job. Of course, they must also offer affordable installment loans because at this time the means to meet normal payment terms do not exist.

Terms to keep in mind

Giving out a $5,000 unemployment loan may seem like more of a social charity than a business. To some extent, that’s true, but it’s also a business deal, and lenders expect the loan to be paid in full and on time. But what are the terms to expect?

The key terms are the interest rate and repayment period, just like with any other loan. However, because the lender grants approval without a job, the interest rate is higher to cover possible losses, while the payment term is longer.

The longer loan term is what ensures that these affordable installment loans are, in fact, affordable. For example, a $5,000 loan paid over 12 months is more expensive than 5 years.