The economy goes through ups and downs. When it is down, it can be very difficult to get loans when you are unemployed. Banks and other traditional financial institutions will want to reserve their scarce capital for the most affluent.
The ill effects of the 2008 Sub-Prime Mortgage Crisis are still drying up capital sources to this day. Nevertheless, we will explain how to get emergency loans when unemployed.
When You Need Money Now
Your children are not going to understand if there is no food on the table. Your landlord is not going to understand why you are late with the rent. Your life requires money, so you can enjoy both the good things and basic necessities of life. This can be even more frustrating when you are a single father / mother and need an emergency loan.
Unfortunately, money problems are the primary source of arguments between husbands and wives. When you are struggling to make ends meet, it places undue stress, hardship, and pressure on all parties involved. If it continues, it can increase your blood pressure, lead to headaches, and cause insomnia.
Life can’t wait until you find a job.
If you are taken to the hospital, you will be given a hefty medical bill. And, how are you going to pay that? This can lead to a “Domino Effect” of bad things causing other bad things to happen.
Unfortunately, even if you tell a bank manager – “I need money now” – he may not listen. That is because he is part of a traditional financing system that might be outdated. Some say that the traditional bank became obsolete when they ran out of money during the 2008 Sub-Prime Mortgage Crisis.
2008 Sub Prime Mortgage Crisis Lingers
Why does the 2008 Credit Crunch matter today? In the banking industry, there are certain fundamental events that change finance forever. You might think of the Great Depression and the 2008 Sub-Prime Mortgage Crisis.
These two catastrophic events have a lot in common. First, both caused tremendous unemployment and financial distress. It took decades for America to rise from the Great Depression.
Secondly, they caused capital markets to seize up. Banks stopped lending to one another. Eventually, the government got involved by guaranteeing loans.
Afterward, legislators said that the entire capitalistic system was at risk during both crises. To deal with this systemic risk, they passed numerous laws to prevent it from ever happening again. Let us focus on the 2008 crisis for a moment.
After 2008, the supposedly “Too Big To Fail” [TBTF] banks were bailed out by the government. When this happened, many of them were forced to undergo numerous stress tests. These stress tests and other restrictions made the mainstream banks very timid in offering new loans to the poorest applicants.
Bank Loan Requirements
The traditional banking system can be a bit counter-intuitive. The primary loans are given to the most wealthy – governments, multinational corporations, and rich people. Why is this so?
The affluent have an easier time qualifying for traditional bank loans. They fit the ideal customer demographic of a traditional bank. Traditional bank loan requirements might include all of the following:
- Banking Accounts
- Assets
- Steady Income
Whereas the unemployed might have the first two, they don’t have the last. Unfortunately, the largest banks are not very lenient, flexible, or accommodating. If you don’t qualify, they can find a wealthy individual who will.
Rising Numbers of Unemployed
Today’s long-term unemployment rates are comparable to the Great Depression.
Many large retailers are struggling to make ends meet. A few have filed for bankruptcy, leading to increases in the unemployment rate. John Williams and other economists have shown that the government’s reporting of the unemployment rate is not true.
And, the government even admits it. For example, the government’s unemployment rate will not factor in people who have been looking for a job after a certain period of time.
Alternative Lending Sources During Unemployment
Fortunately, free markets allow new businesses to offer financial services to satisfy consumer needs that are not being met. That is how the payday loan industry entered the picture. The payday loan industry offers an alternative financing system known as a short-term loan.
Alternative lenders may be willing to lend to those who have been turned down by traditional banks. Gradually, the country is adding more cash advance storefronts. Currently, there are over thirty states that permit payday lending.
Some of the largest banks have lost their personal touch. They might have called you by name before; now, they might only think of you as a number. Payday loan companies are trying to make finance human again. One way they can do this is by trying to provide money to the unemployed.
Convenient Payday Loans
Financial institutions should lend to individuals who really need the funds. Many companies in the payday loan industry lend to those who need it. They understand that nobody is perfect.
Benefits of Taking out Payday Loans When Unemployed
The alternative lending business model aims to provide loans to those who need them. The model varies by company but may include a sensible risk assessment model that leans less on credit score and employment status.
Alternative lenders are becoming more popular by the minute. These are some of the benefits of payday loans:
- Less Paperwork
- Flexible
- Faster
- Bad Credit
- Timely
- Loans available in a few business days
Working with a lender who requires less paperwork may make the loan request process easier. Some individuals are continually applying to various lenders, which might only be a waste of their time.
Flexible terms and conditions allow you to get money in your hands based on your personal circumstances. Nobody is perfect. Many bankers are creating irrational terms and conditions because they don’t have the money.
Large banks would rather lend to the wealthy Blue Chip corporations. In fact, they have changed their market focus away from individuals, especially the unemployed.
Faster application procedures mean that you can get your money within days, not weeks. Unfortunately, some large banks are international. The local branch managers don’t even have the authority to approve loans.
Your bank application might be sent to headquarters in another country. This red tape only wastes your time. Meanwhile, your bills pile up.
No income is a reality for some. The unemployed should not be shunned. In fact, you have more of a need for money than others. Some lenders provide loans for those without jobs.
You might receive higher interest rates in order to compensate for the higher risk of the unemployed. But, at least you may get your money. A good lending relationship can be beneficial for all parties.
Bad credit is one of the effects of not having a job. An alternative lender may be more understanding of this, as long as you have a steady flow of income.
Paycheck loans shouldn’t penalize you for what you can’t control. There are many reasons for bad credit, including simply having bad luck.
Timely financing can get you out of a jam. Though, if you don’t make timely payments, you might be charged late fees.
A timely loan can help you pay for a very important product or service. Medical bills, grocery bills, and transportation costs continue to rise. A loan might ensure that you still have transportation to complete your daily tasks.
Short-Term Lenders Operate Differently
Alternative lenders have reduced the amount of paperwork that is required to get money. They have also sped up the process. The traditional banking process has so much red tape that it slows down the process. Today’s most advanced lenders remove the red tape, so you can get money faster.
Nowadays, there are many lending options. Emergency loans for the unemployed can help people in dire straits. After losing their jobs, they might be descending down a whirlpool of despair.
Traditional banks have very restrictive terms and conditions, red tape, and bureaucracy. Since 2008, they have reduced their lending amounts. Many alternative lending options are emerging, such as lenders who offer payday loans.
Financial Solutions for the Unemployed
Loans for the unemployed can help you fix some of your immediate financial problems. You may get money in your hands faster than with other lending options. Sometimes timing makes all the difference.
If you are eventually approved for an online payday loan, you should carefully review all of the terms and conditions of your cash advance agreements to see if everything is acceptable. Unemployment loans may be able to provide you with the financial means to regain control of your life.
