If you're out of work cashflow will be tight, so you may need to take out a loan to make ends meet. The trouble is, lenders are often unwilling to loan money to those without a stable job and salary.
However, there are options available, so here is our guide to getting a loan if you are currently not working.
Loans for the unemployed
Usually you will need a steady salary to borrow from mainstream lenders, but there are an increasing number of specialist providers of loans for the unemployed. So being without a job, salary and stability to borrow from high-street banks does not mean you won't get access to cash.
However, there may be separate factors at play making it tricky to get access to credit. For example, you may also suffer from a poor credit history, which can happen if you've missed repayments in the past, or ever had a County Court County Court Judgement (CCJ) or bankruptcy against your name.
So being without a job, salary and stability to borrow from high-street banks does not mean you won't get access to cash.
However, being in this situation doesn't mean that all lenders will reject you. It will simply mean that you have fewer options, and loans will come with higher interest rates.
Improving your credit history
An option if you're unemployed and seeking a loan, and want to make yourself more appealing to lenders, is to work on improving your credit score. You can do this by, for example, putting your name on the electoral role when your local authority sends you details of this.
Also make sure to space out your applications for credit. Every time you apply for a loan you will leave a 'footprint' on your file - and if you're rejected, this makes the next lender less likely to accept you. When you do get credit, make sure you keep up repayments to gradually rebuild a damaged credit history.
Types of loans you can get
You won't be able to apply for the best buy loans available, so those with the most attractive terms and rates. These are likely to be reserved for borrowers with clean credit histories who are in employment.
However, there are specialist lenders that offer loans to people who seem a greater risk because of their poor credit history, or unemployment. You can compare the rates on offer from these on comparison sites like MoneySuperMarket.
But unfortunately, the greater the risk you are perceived to be by the lender, the more interest you'll pay. It is the folk who need access to credit most who face the highest interest rates from lenders.
Yet while you might face hefty interest charges, taking on a loan will give you the chance to demonstrate that you're a trustworthy borrower, provided you keep up repayments. It can also help tide you over while you are searching for work, but make sure not to overstretch yourself in the meantime. The best option if you are unemployed and without an income however, is not to borrow at all.