In an era of austerity like today unemployment is more of a risk than ever before. Companies are always looking for ways to save money and sometimes this means downsizing or redundancy. Competition for jobs becomes fiercer and even the best, most experienced and most qualified of us can find ourselves without a job. Getting a new job is something we may be confident we’ll find soon enough, but even a few weeks of being out of work is enough to cause us serious financial difficulty.
When in full time work we take having a salary for granted, this injection of cash at the end of each month is the thing that allows us to pay our rent, mortgage, bills and lets us do all the things we enjoy. Once this dries up, it’s easy to start missing bills and important accounts we hold can soon end up in arrears. We may have been provided a severance package, a settlement of cash from our former employer following redundancy. This is to help us get by until we find a new job, but this rarely lasts long. Even once we find a new job, we may have missed a month’s bills. It can take several weeks until we get paid by our new employer, and during this time making ends meet can still be a struggle.
This is less of a problem is we have savings, a credit card or an overdraft to fall back on, but if not then we need to find an alternative solution. Sometimes a loan is the only way out of this predicament. Something to keep our bills paid until the wages from our new job become steady and something we can once again rely on to pay our bills. However, the issue here is that in the time we’ve been out of work our credit rating may have taken a hit. If our bills have gone into arrears, or worse we defaulted on any, then achieving credit may now be a challenge in itself. Lenders may no longer have the confidence in us they once had and may deny any traditional loans or refuse to extend any existing lines of credit.
When our credit rating takes a nosedive; lenders generally don’t ask why. Being made redundant, and that not being our fault, is sadly not always taken into consideration. This is especially true on online applications; the computer just sees the negative credit rating and instantly declines the credit. Speaking with a human being at our bank or building society can be more fruitful, but even then their hands may be figuratively tied by red tape. This is incredibly frustrating, especially for those who’ve gone to great efforts to keep their finances in good order all their lives. It’s unfair that one blip in our record should be enough to put us in further financial difficulty, but more often than not this is exactly what happens.
Luckily there are lenders out there who recognise this and understand this scenario is happening more and more. They understand how unfair it is on the customer and as a result have created their own bespoke products, specially designed for the circumstances mentioned above. We’re talking about loans created to cater for those who are unemployed, or for people who’ve recently been unemployed and are walking the road back to financial recovery. Unemployment loans are designed to help the customer get back to a period of stability, consolidate their debt and pay the loan back over time. Generally in a fashion that’s affordable and convenient to them. These allow the customer to not miss any more bills, escape any arrears they are currently in and mitigate any further damage to their credit rating. It also helps them afford their day to day expenses such as groceries, petrol for their cars and anything else they typically needed their salary for.
It’s important to point out that an unemployment loan exists purely as a means of recovery. They aren’t indented for use beyond this, but they can be a lifeline for those in need. Allowing the customer to go about their life as usual, paying bills and putting food on the table.
Once the customer is back in full time employment and earning money again, then the customer can gradually pay this loan back. The customer can generally have a say in how they pay a loan back too. For example, they and the lender can agree on a period of time that’s realistic and affordable to the customer. They may choose to pay it back over 12 months or longer, there may even be an option for the customer to pay a small amount back at first then gradually increase the payments as things get more stable.
A customer who doesn’t usually get into debt may be uncomfortable having the loan and may choose to pay it back as quickly as possible. While other people may find it easier to pay the loan back over a much longer period of time, this way they don’t feel the payments as much. This way they can relax in the knowledge that they’ve managed to avoid a worse scenario such as falling into arrears with their priority bills.
The customer may have already been in debt prior to losing their job. Unemployment now not only risks putting their priority bills at risk, but also puts them in a position where they risk defaulting on already existing debt. An unemployment loan is for this too. The customer can choose to keep up to date with their existing accounts, or they can choose to pay each of them off entirely. This allows them to wipe the slate clean and not worry about multiple debts which could cause them more stress and problems over time.
Consolidating their debt into one place also allows them to take advantage of newer and potentially cheaper interest rates. The rates may have come down since they took out their earlier debts and taking out a new loan means they can get rid of older, more expensive ones. This means the customer can take control of their finances and move their debt to one, easier to manage pot, with a better rate of interest and more time. Consolidating the debt may only feel like moving the debt, but this in itself can be a good idea and comes with plenty of benefits, but if the customer secures a more favourable rate of interest then it will also save the customer money in the long term.
Taking out an unemployment loan can also help get the customer’s credit rating on track. Whether the customer was made redundant or was unemployed for a long time, their credit rating is likely to have suffered if they missed any bills. Being granted an unemployment loan then paying it back when requested will be seen as a positive point on the customer’s credit file. First, as the loan is likely to be granted this marks the first positive point, a supplier of unemployment loans is unlikely to say no to an unemployed person if they have a recovery plan in place. So taking advantage if this to build ones credit rating back up is absolutely something to consider if that customer has taken a negative hit. Paying the loan back over time is also a way to build up positive points on a credit file.
One of the most important things to consider is our own wellbeing. Worrying about money can cause people tremendous amounts of stress especially if they’ve recently lost their job. It’s easy to get overwhelmed and this can lead to depression and other aliments associated with mental illness. Taking out an unemployment loan can help us know that, at least for now, we have a strategy in place and we’re unlikely to get into arrears and fall behind in our payments.
Unemployment is something that can threaten any one of us at some point in our lives. It’s important to know that sometimes it’s out of our control, so never beat yourself up about it or be too harsh on yourself. Companies close and sometimes make people redundant purely to cut costs, it’s very rarely personal. Sometimes the position itself becomes surplus to requirements and that means the people doing it are sadly made redundant as a result. This doesn’t reflect on them or mean they did a poor job; it just means the company’s needs have changed and now so must their structure.
What’s important if you find yourself unemployed is to first take some time to recover, after all losing our job can be a traumatic experience. Then update your CV and put a plan in place to pay your most important bills. If you feel like you’ll struggle to pay the bills between now and when you get a new job, then consider a unemployment loan to help keep your finances stable.
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