Surprising and unwanted situations tend to put people into a rather severe and unexpected dilemma. An urgent need for appropriate and fast cash is often felt in such situations. This situation can be mental harassment for the people who are unemployed or who are self-employed and are facing the negative pangs of the ongoing depression or economic recession. The credit creation institutes, which are basically the banks and lending institutions, thus step in to provide the people with loans on a humanitarian basis.
Criteria for Application
Loans for the unemployed who have a bad credit score are rather rare, and can be availed by very few people. In case of the normal loan the lenders consider one genuine aspect while sanctioning or approving it, that is, the potential borrower’s ability to repay it. The ability to repay is basically determined by the person’s income – the monthly salary and also the interest and the returns that the person receives upon the securities and deposits that he has made in the past. If the person is not employed, then the income projection of that person is taken into consideration.
In such cases, lenders consider some of the different aspects of the persons financial status before approving the loan. The first thing that the lenders usually take into consideration in the list of assets is the ones that have a good market value. This assessment is done because most of these loans are secured. It means that the collateral is sold off by the lenders in case of a default. Unsecured loans are rather rare and are usually approved for the people who have an effective credit report and rating. Though the loans for the unemployed with bad credit are secured loans, several legislations have been implemented in order to regulate this facility and also protect the interests of the borrower. The repayment to the lender in case of insolvency or bankruptcy is different and is also specified by all the judicial systems that deal in different types of bankruptcy.
The second thing that is taken into consideration during the approval procedure is the qualifications of the borrower. They are assessed in order to determine the average salary that the person would get in the near future based upon his qualifications. The principal amount is approved or negotiated, on the basis of the probable average salary that the person can get.
The final question that remains is that how does one apply for these loans? Here is what you can do.
There are basically two ways in which you can apply. In the first process, the people can basically approach the lender and fill out an application for an unemployment and bad credit loan. The application is then reviewed by the lenders and the terms and conditions and the specifications of the loan are concluded upon. For example, the asset that is to be pledged is decided with the help of the proposed principal amount. The rate of interest and the periodic installment is calculated with the help of the probable average salary that the borrower can get in the near future.
The second way is to apply for a program where all the terms and features of the loan have already been decided upon by the lender. While applying for such a loan, you also need to assess your own financial situation. For example, the value of the collateral that is to be pledged must lie in monetary range that is decided by the lender (the value of the asset should be between USD 10,000 to USD 15,000).
You may also consider applying for some of the other types of similar loans such as business or emergency loans for the unemployed. These are generally categorized as personal loans. However, I would recommend you to first plan out and assess your own financial situation instead of hastily applying for the loan because a default or late payment is not at all healthy for your credit history and rating.