It is difficult to obtain an installment loan for the unemployed, since income is very low during unemployment. Potential lenders assume that unemployment earnings are just living; For unemployment benefits, this assumption is based on the official definition of the payment amount. The level of unemployment benefit I for recipients with a previously good income definitely reaches the level of average earnings. However, since this is only paid out for more than a year in a few special cases, it can only be recognized as security for loans with very short terms.
Do unemployed people get a loan from the dealer?
Both in mail order and increasingly in brick-and-mortar retail, sellers offer installment payments. Since in most cases they refrain from submitting proof of salary for small loan amounts, installment credit for unemployed people is quite possible via the dealer. However, the unemployed borrower has to be careful to agree on actually affordable rates. Failure to comply with the payment agreement always leads to high follow-up costs for a dealer loan.
Does the Office offer an alternative to the installment loan for the unemployed?
In some cases, recipients of benefits under Social Security Code II do not need to take out a bank loan because they are entitled to an interest-free loan from the Employment Agency. Such a claim exists in principle if necessary replacement purchases have to be made and there is no entitlement to a grant. The Office can also take over the costs of the electricity bill or rent debts on loan. In the event of impending eviction, there is usually a legal right to assume the accrued housing costs.
How do unemployed people get an installment loan?
Loaning to the unemployed is easiest when they can provide a guarantor with a fixed income. In this case, the bank evaluates the guarantor’s good credit rating and grants a loan to unemployed applicants.
Especially on the Internet, installment loans for unemployed people can be obtained for any purpose, even without a guarantor. For cost reasons, some lenders refrain from presenting salary certificates and are content with simply stating the amount of income. Other banks explicitly accept unemployed borrowers as customers and agree a long repayment period with them, so that correspondingly low monthly installments are payable.
However, since the risk of bad debt losses for unemployed people is above average, they charge high interest rates accordingly. Private loans are a sensible alternative to bank loans. Different platforms use the Internet to broker loans between private individuals, with each lender deciding for or against participating in a loan based on the project description. Many investors who act as lenders on the relevant pages primarily pay attention to the purpose for which a loan is requested and only secondly deal with the question of security.
Regardless of how the unemployed borrower receives his loan, he must make sure to pay the lowest possible interest rate and obtain several offers for an unemployment loan before signing the loan agreement. An installment loan is ideal for the unemployed if it allows flexible repayment in addition to a low interest rate.