Unemployment Loan: Feasible and Useful?

Unemployment is a life situation for many people, which can mean financial difficulties. Due to the lower monthly payments, current obligations can become a heavy burden and the standard of living also suffers in many cases. This situation is particularly serious in families with several children. Often only a loan could help to bridge the financial emergency. However, most banks refuse unemployment credit.

Unemployment benefit is not recognized as income

Unemployment benefit is not recognized as income

Lending is one of the most important lines of business for banks and credit companies. Most of the sales can be made here or high losses can arise. Therefore, borrowers are scrutinized before a loan application is approved by a bank. An unemployment loan is therefore particularly difficult and cannot be obtained at all from some banks.

Unemployment benefit does not count as income, but is used solely to make a living. When applying, banks therefore also require proof of income from the potential borrower. If an application for unemployment loan is made to the house bank, a glance at the checking account is usually sufficient.

A credit facility can help in the short term

A credit facility can help in the short term

Unemployment loans are usually rejected, especially if there are children in the family. The only way that house banks can or do not have to offer their customers in the event of unemployment is to increase the credit line for the overdraft facility. However, this overdraft facility is very expensive and is billed quarterly at most banks.

The resulting costs are not insignificant since the interest on these loans is usually in the double-digit range. Therefore, the money should be paid back quickly. If the credit is permanently at the limit, the bank can react. The overdraft facility can be canceled by the bank or savings bank at any time or is adjusted to the monthly income.

Private lenders can finance a loan

Bank loans have been available in the United States for many years. Private individuals offer loans on various platforms on the Internet, so-called peer-to-peer networks. This model has now been copied to various platforms in Germany. Since the requirements are not as high as with banks, a loan can also be applied for when unemployed. The borrower registers on this credit platform and can, according to Credit Bureau information, stop a project that is to be financed.

The private donors can finance the project together. If the loan amount has been provided by several donors, the loan is paid out. An intermediary bank takes over the payment and returns the incoming credit installments. Private financiers receive an attractive return on their financing.

Unemployment credit can be avoided

Unemployment credit can be avoided

In some cases, further debt is not necessary. Savings measures and the restriction of lifestyle often help. If there is still a need for liquid funds, a loan seeker should first visit the house bank. If the advisors to the banks and savings banks refuse an unemployment loan, they always act in the company’s interest.

A refusal can also be an advantage for the loan seeker. Since the banks are based solely on the numbers of the bank customers, a refusal also protects the loan seeker from further indebtedness. If a loan is necessary, it must be calculated precisely in the case of existing or impending unemployment and therefore also requires precise planning with a private lender.

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