Business Knowledge

Should You Use Payday Loans for Unemployed

If you are unemployed, you still have a chance to get financial aid. While rejection from banks and credit unions becomes almost inevitable, approval from private lenders remains quite real. The latters don’t ask you for a steady income to qualify for a payday loan for unemployed. So is this really the best way to borrow money? Let’s try to figure it out!

Getting a Payday Loan When Unemployed

You will need to have some form of income to obtain a payday loan online US. This is required to demonstrate your ability to make full repayment on time.

Unemployment benefits are considered to be a suitable form of income. Most lenders will find it appropriate for further approval. But those benefits must be not a one-tine but regular thing. Ideally, you take a bank statement with the value of employment benefits landing on your bank account every month.

Are Payday Loans a Smart Option?

Online payday loans for unemployed are quick and easy to get hold of, which makes them popular among American citizens. It doesn’t take much time and effort to complete an application procedure and get money to your bank account.

Each time a repayment period is extended, additional fees and interest rates are added on top by boosting the overall cost of the loan. Consequently, borrowers can quickly stuck in a cycle of debt that is hard to avoid. According to a Pew Trusts report, the average payday loan borrower needs up to five months to pay a payday loan. He or she spends around $500 in fees for borrowing $375.

The problem with payday loans is associated with relatively high costs. For example, a $100 payday loan taken for a two-week period will cost you around $15 extra. This equates to an annual percentage rate of 400% or even higher.

Payday loans online for unemployed should always be considered with care. Regardless of your circumstances, it’s important that all the better alternatives are tried out first before applying. Payday loans should always be a last resort.

What Are the Alternatives to Rely On?

A personal loan can be a reasonable way to resolve your financial problems. Personal loans are less risky than payday loans, they traditionally let you borrow more. The requested amount of money can be transferred to your account the same day.

While direct lenders will ask for a stable source of income, it is possible to use Social Security, interest and dividends, child support and disability income, to prove your eligibility for a personal loan. Unemployment benefits are usually offered for a limited time only. Considering a short-term nature of payday loans, they can be issued based on unemployment benefits.

As a borrower, you should have some alternatives. If you find a job and your unemployment benefits are terminated or you need a bigger amount of money for a longer period of time, you may consider taking one of the following options:

  • Personal loans a great option for borrowing money. They cover a longer period of time and allow bigger amounts of money. They also impose lower interest rates and don’t involve “hard” credit checks.
  • Credit cards can provide you with sufficient funds within the specific limits. You don’t need to do anything extra. Just withdraw money from your card and cover the debt on time. Credit cards also provide a low rate of interest, which makes them excellent for emergency purposes.

Before you decide to borrow money from financial institutions, you should always try to find money on the ground. Ask your family and friends for help. If they agree to help you, they won’t charge your interest rates and fees. Also, they will give you more flexible repayment terms.

Managing Your Payday Loans

Before you take a payday loan for unemployed, it’s important to take steps to manage it properly. Importantly, you must be totally comfortable that you can afford to repay the amount you borrow and fulfill the repayment obligation on time. Overstretching yourself might make your financial situation even worse. Meanwhile, missed or delayed payments can leave a derogatory mark on your credit report.

Make sure to analyze the details before putting yourself into a debt circle. Make sure you can handle your debt obligation efficiently.

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