Payday loans for the unemployed

Navigating a period of financial choppiness is never easy, especially when unemployment is thrown into the mix. And without a reliable income stream, many people look for ways to get cash fast. But are loans for the unemployed a feasible option? And are there alternative ways you can secure funds and get back on your feet?

We’ll outline the eligibility criteria surrounding payday loans, discuss some alternative options, and offer some handy tips for navigating through a rough financial patch.

What is a payday loan?

First thing’s first, what exactly is a payday loan? Well, a payday loan is a small amount of money which someone might borrow to tide them over until their next payday.

Payday loans can be hugely helpful when it comes to unexpected expenses which might crop up, such as broken cars, boilers and ovens. This is because you can access money quickly to cover these emergencies, and then pay it back in manageable payments to the lender.

However, it’s important to highlight that payday loans might not be suitable for everyone, and you should only consider one if you’ll be able to comfortably meet the repayment deadlines.

How to get a loan when unemployed

If you’ve been wondering about payday loans for the unemployed, let’s dive into the topic. When applying for a loan, a responsible lender will look at your credit history, your income, and your employability status.

Most FCA-registered short-term or payday lenders will do checks to confirm you’re employed, ensuring you can comfortably meet the repayments and won’t fall into financial difficulty. Some lenders might also propose a minimum income threshold (such as £1000 a month) before lending, as this helps them avoid lending to those who might struggle to make the repayments.

Payday lenders will also carry out a credit history check. So, if you’ve had financial difficulties in the past resulting in a less-than-ideal credit report, you might not be accepted. (Although if you meet the other requirements, you may still be accepted and offered a lesser amount with higher interest rates).

So, if you’re currently unemployed and thinking about making an application, it’s important to bear in mind that you might not be accepted. Although every case is different, so there’s a chance you may get accepted for a smaller loan with higher interest.

If you’re looking for further insights, make sure to check out our guide on payday loan eligibility criteria.

Also, there are other options to bear in mind such as guarantor loans. These are loans whereby a third party (usually a trusted friend or family member) agrees to pay the debts if the borrower fails to do so.

Managing your finances during a period of unemployment

If you’re unemployed and loans aren’t looking like a feasible option for you, let’s look at some alternative ways to navigate a tricky financial period.

1. Effective budgeting

Effective monthly budgeting is key when it comes to taking control of your finances; it can help you stretch the money you do have and ensure you don’t run out. Whether you use budgeting templates or handy budgeting apps, it’s important you’re aware of the money you have coming in and going out of your accounts.

If you’ve previously managed to build up an emergency fund (dedicated to keeping you afloat in trickier times), budgeting can also help you make effective use of this. And if you don’t have one, once you’re back on your feet, it’s definitely a good idea to set an emergency fund up!

2. Look for ways to save

Next, it’s sensible to look for ways to cut back on your everyday expenses too. So, here are a few ideas on how to do so:

• Food shopping: when it comes to food shopping, how about creating meal plans before you head off to do your weekly shop? These help to reduce both impulse buys and food waste. Plus, you should keep your eyes peeled for discounts, loyalty programmes, and cash back opportunities.

• Utility savings: whether it’s unplugging your electronics, choosing energy efficient appliances, or opting for water-saving fixtures, there are various ways to save when it comes to your utilities.

• Saving on entertainment: while it’s important to budget for entertainment and enjoyment, how about cutting back costs by reviewing any unused subscriptions? Another option is to share subscriptions with family and friends!

• Negotiate your bills: it might also be time to negotiate with your service providers (for instance your phone and internet providers). You could ask whether they have any discounts on offer, or potentially switch to a more affordable provider all together!

3. Maximise your income

If you’re in-between jobs, you might be looking for some ways to boost your income temporarily. If so, here are a couple of options:

• Starting your own business: this could involve something as simple as setting up an Etsy account and selling handmade creations. We’ve got a blog full of ideas on easy ways to make money from home which might be of interest!

• Part-time freelancing: another great option when it comes to making some extra cash is part-time freelancing. From copywriting to proof-reading as well as virtual assistant roles, there are multiple options out there!

• Selling your unwanted items: another great way to earn cash fast is by selling your unwanted items online! This might involve having a huge clear-out, then getting your clothes listed on a site such as eBay. Electricals and unwanted tech also sell particularly well.

And don’t forget to explore your options when it comes to benefits for the unemployed. For instance, those who have a low income, are out of work, or are currently unable to work may be entitled to Universal Credit. To claim this, you must also live in the UK, be 18 or over, and have £16,000 or less in savings and investments.

There’s also Jobseeker’s Allowance, a payment designed to help you when you’re actively looking for work. To be eligible you’ll need to have been previously employed, and paid Class 1 National Insurance contributions in the last 2 to 3 years.

How to boost your employability

Securing a new role doesn’t come without its challenges, and we understand that it can feel like a huge mountain to climb. But there are various things you can do to boost your employability and successfully secure your next role.

Give your CV a refresh

First of all, ensuring you’ve crafted a clear and compelling CV is key to supercharging your employability. You’ll want to display your key skills and capabilities, as well as your education and employment history.

Perhaps the most important tip is to tailor your CV (and cover letter) to every job you’re applying for. Why? Well, you’ll be able to demonstrate your enthusiasm as well as why you’re a perfect fit for the role.

Make sure to dive into our blog on how to write a CV which is filled with everything you’ll need.

Spend time developing your skills

While a period of unemployment can leave you feeling uninspired, why not spend some spare time developing a few new skills? This will give you a burst of motivation as well as making you stand out in a pool of applicants when you do apply.

You could sign up to an online course, attend a workshop, or dedicate some time to a volunteering project you’re passionate about. Alternatively, spend some time developing your softer skills such as teamwork and collaboration.

This is an important step when it comes to securing a new role and boosting your income.

Finally, let’s leave you with some valuable resources…

Navigating a period of financial hardship can be challenging, but that doesn’t mean there isn’t help out there. If you’re struggling, perhaps consider looking into either of the below:

• Food banks: for those going through financial hardships, food banks can provide all-important short-term food support. There are various banks dotted around the UK offering supplies to those who need them. Simply type your postcode into the trussell trust website to find your nearest bank.

• Debt management services: next, if you’re struggling with debt as well as unemployment, there are services designed to help. For instance, you could contact a charity such as StepChange for free debt management advice.

If you’re currently thinking about loans for the unemployed, it’s important to consider all of your options first. For instance, through practicing effective budgeting, boosting your and implementing tactical job search methods, you’re bound to be back on your feet in no time!

Before you go, why not check out a couple more of our guides on guarantors and payday loans for the self-employed?