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Loan for the unemployed – what’s behind it?

This topic seems to be spreading like wildfire on the Internet. People without work are desperately looking for credit to fill their financial holes. But what exactly is behind the statement “Loan for the unemployed”?

Resourceful and dubious credit intermediaries have set themselves the task of taking advantage of the financial hardship and the desperation of the unemployed and converting it into loan commissions or loan fees.

Problems with the loan application for the unemployed

Problems with the loan application for the unemployed

As a rule, a bank is only granted a loan if the borrower has current income (i.e. has work) or appropriate collateral (such as real estate, motor vehicles, securities, savings, etc.). Current unemployment income no longer applies to the unemployed, so all that remains is the collateral. The question now arises if you already have no income, except probably unemployment benefit or Social welfare, whether you offer your “assets” as security.

Use of collateral without current income

Since it is usually not foreseeable when a job can be taken up again, pledging collateral is a very risky undertaking. If the loan cannot be serviced from current income and the payments fail to materialize, the lenders will next be waiting for the collateral to convert it into face value. So you have not got any further and the wealth that has been laboriously generated over a long period of time seems to be melting away.

Sticking point: loan interest

Sticking point: loan interest

If you want to take out a loan from a bank, the creditworthiness, i.e. the creditworthiness, is first determined. Based on this value, the bank sets an interest rate for granting a loan by calculating the default risk (according to fixed guidelines). The poorer the credit rating, the higher the bank calculates the default risk and the higher the loan interest.

If it is now, as the saying goes, a “loan for the unemployed”, no credit rating can be determined from the income. The borrower (in this case the unemployed) will not receive a loan because he is not creditworthy, so the risk of default is so high that the bank would not grant a loan.

Dubious credit brokers

Dubious credit brokers

With common sense, you have to ask yourself now: “If a bank doesn’t give me a loan, why should someone else give me a loan even though the bank lives on it ?!”

This is exactly where these credit intermediaries start, because the people who apply for a loan do not ask this question. You only see that no loan was granted, but somehow money has to come “ashore”.

It is promised that loans will be given without any evidence or collateral. This is complete nonsense! No reputable company would grant loans without knowing the repayment. Most of the time, the credit intermediaries take lavish fees for this. The “loan for the unemployed” turns out not to be a financial blessing, but rather a cost or debt trap, since in the end only fees are paid without the loan seeker seeing any money.

If someone has been found who lends money (except from the family and friends) without receiving collateral for it, this will usually amount to double-digit loan interest and will most likely already be in the criminal “credit shark” sphere. See also: Credit usury

Loan for the unemployed – we advise against!

Loan for the unemployed - we advise against!

If you are in the predicament of having lost your job, you should concentrate fully on finding a job as soon as possible. We strictly advise against “tying up” any loans or credit intermediaries without a fixed income, since the resulting risk cannot be assessed. One should rather think about where there is still potential for savings, even if it is only so small, to improve the financial situation a little.

If you conclude a loan at the end of the day, you are still without an employment relationship, have tied up your household budget with fees and in the end only more debts remain.

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