Unemployed people are at higher risk compared to workers, making an unemployment loan a difficult undertaking. After all, regular income is the basis for paying credit installments.
The possibilities at a glance:
- Unemployment loan from private individuals
- Increase in creditworthiness through a guarantee
- Unemployed loan from abroad without credit record
- Unemployment loan from the Federal Employment Agency
Unemployment loan from private individuals
Online unemployed people have the opportunity to obtain credit from private individuals through certain portals. These portals only act as intermediaries and set the framework for the loan agreement. The sum of the loan amount is provided by either one or more people. Even if there is no bank involved, this does not mean that no credit check is carried out. Despite everything, when looking for a loan, the applicant’s financial situation is examined very closely. It is therefore possible to obtain a loan through such portals, but there is no guarantee.
Increase in creditworthiness through a guarantee
The unemployment rate of the unemployed is low, and the credit risk for the lender is accordingly high. One of the few requirements to still be able to take out a loan is to improve your credit rating. This is possible with a guarantee. The guarantor is usually a confidante or good acquaintance of the unemployed. If the guarantor has a sufficiently good credit rating, the requirements for the unemployed person’s creditworthiness are met in some cases. The bank concludes a guarantee contract with the guarantor.
In it, he undertakes to assume the obligations from the unemployment loan when the borrower no longer fulfills them. After the guarantee has been concluded, i.e. after the guarantee certificate has been signed, the loan agreement is concluded with the unemployed borrower and the loan is paid out. The loan seeker can take out the desired loan. The credit institution can conclude the credit transaction and earn on the loan interest. The required creditworthiness is available through the guarantor and secured by the guarantee. The credit default risk is reduced to a minimum.
Residual debt insurance makes sense for unemployment credit?
If you are granted a loan in this way, the question of a residual debt insurance (RSV) is inevitable. Does this also make sense as an unemployed person? In any case, it protects you from situations in which you are no longer able to pay the loan installments. Examples include illnesses, accidents or, in the worst case, death. The RSV then pays the costs. There are a number of different residual debt insurance options, such as accident, illness, disability or death. It is therefore also necessary as an unemployed person to think about an RSV.
Unemployed loan without credit record as an alternative
Banks in Germany will almost always obtain a credit record query as a tool for checking creditworthiness. The company, which is hidden behind it, stores important financial data of the citizens. Both banks and companies can view this data if you give your consent. All behavioral characteristics regarding payment behavior, from the past, can be checked at credit record. Banks provide credit record with information on existing credit obligations, checking accounts, etc. This is a neutral entry. The situation is different for banks or companies that report something when there is a default. The latter leads to a negative entry at credit record and has the consequence that no unemployment loan is granted.
Credit record entry can be made in the event of unemployment
Unemployed people get into this situation very quickly. If the job is suddenly lost, monthly debits to the account are no longer possible. An unpaid telephone bill can be enough to get a negative entry at credit record. One way to get a loan, however, is without credit record loans, which are offered by banks from abroad. In Germany, every bank will get a credit record query. In other countries, such as Switzerland, a loan can also be granted without obtaining the information.
Good credit quality is crucial for an unemployment loan
Since the banks then lack security, they will place special emphasis on good creditworthiness.
Without real assets, savings or a guarantee, things look bad for the unemployed.
However, there are many dubious providers in this market who want to make a profit from the need of the unemployed. As a rule, these black sheep can be recognized very quickly. It should be noted that reputable providers never require prepayments from loan seekers. Offers where this is expressly requested before the loan is paid out before the contract is available are in most cases dubious. Interest rates should also be taken into account. If interest of far more than 10% is required here, then this distance should also be kept.
Unemployment loan from the employment office
The fact that the employment office also grants loans to the unemployed may surprise many at first. In urgent cases, the Federal Employment Agency grants an unemployment loan without interest and with very low monthly installments. The intended purpose must be determined in advance. It goes without saying that no loans are granted for consumer spending. Urgent cases are, for example
- necessary repairs to your own home (such as heating repairs in winter)
- necessary devices for living such as washing machine or refrigerator