There comes a time in your life when you should depart from your current job. Whether unemployment was a choice or not, you’ll probably experience money difficulties without the paycheck. Here are some borrowing options available if you suddenly lost your job.
Home Equity Loans
This type of loan has a revolving balance similar to a credit card. If you have a substantial amount in your home equity, you can borrow against it. Home equity loans are quite flexible because borrowers can stretch their installments for 5 to 25 years.
Borrowing Against Your Life Insurance
If you have a permanent life insurance, your policy will have a cash-value feature that is separate from your death benefits account. You have the option to withdraw or borrow the amount in your cash-value. Make sure though that you inquire about the costs and consequences of doing this.
Credit Card Cash Advances
There’s probably no quicker way to raise cash than to swipe your credit card in an ATM. However, cash advances have very high interest rates, so you better be careful.
Borrowing from pawnshops is another easy way an unemployed person can raise cash. You have to bring a valuable item for it to be appraised, and you will be offered a loan at usually about half the price of the item. Although this may seem a lot less, the benefits with pawnbrokers is that it won’t affect your credit score even if you default.
Loan with Cosigners
Asking the help of someone, such as a good friend or relative with good credit rating can help you secure a loan. It also increases your chances of borrowing a larger amount, however, you need to declare other sources of income if you’re unemployed.
Similar to car title loans in the US, logbook loans are a type of secured loans wherein you have to submit your car’s V5 document or “logbook” to a lender as collateral against the loan. Logbook loans require no credit checks, so anyone, even those with bad credit can successfully apply. Although the interest rates are high, they are not as high as payday loans and the payment terms are quite flexible.
Payday loans are short-term loans which you are bound to settle on the next payday. However, if you don’t have a paycheck to show, many payday loan companies will let you borrow as long as you can show you some proof of income going into your account such as proof of unemployment, disability, or alimony. They are even more expensive than logbook loans and requires to be paid immediately, so consider this only when the need for money is urgent.
Borrow Directly from Family or Friends
There’s no better way to borrow than from a friend or family member, who can even help you out without charging you interests. However, this also can be dangerous since a relationship is at risk. The last thing you want in a period of unemployment is destroyed relationships.