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Anybody can have an emergency financial requirement. Even an unemployed person can have the immediate need for money for different reasons. In such situations, you can apply personal loan to fund your needs. Applying for a loan when you are unemployed is quite a tough thing. An employed individual can ask for a loan by showing his or her income as proof to show the ability to repay. Many banks may reject your loan application when they see that you are unemployed.
The eligibility for personal loans is calculated by checking the applicant’s income, nationality, and age. However, your unemployment status should not deter you from applying for a loan when you are in dire need of money. There are quite a few personal loans offered for unemployed people here in Singapore.
A few of the situations in which you are unemployed include:
Let us discuss the ways through which you can take a personal loan when you are unemployed:
If you are unemployed with a good previous credit history, then it does not matter. You can still apply for a loan with the help of your good credit score. Your credit score will show that you can repay your loan on time. This will help the loan provider to trust your repayment ability. Therefore, if you are unemployed for a certain period, make sure you enhance your credit score before you apply for a personal loan.
You do not have to worry if you are currently not working with any company. If you have any income earning asset in your name, you can mention it while applying for a personal loan. This will give a sense of assurance to your bank that you will be able to repay your loan with the money earned from these assets. You may have to show your previous bank statements to prove that you are actually making money from these assets. Income earning assets can include shares, income from property given on rent, bonds, certificates of deposit, and other assets that will help you in earning dividends or interest. These assets provide a stable income and they are great financial instruments for long-term planning.
Most personal loans are unsecured in nature. Banks provide personal loans without asking for a collateral. However, if you want to apply for a very high loan amount, some banks may ask you to give a collateral. Presenting a collateral is a great way to procure a loan when you are not salaried. This will serve as a security for your lender. It is also beneficial to you as loans that are given with a collateral generally come with very low interest rates. Due to the security provided in this arrangement, the interest rates are low. When you give a collateral, in case you fail to pay your EMIs on time consequently, your asset will be seized. This is how a collateral arrangement works.
Let us take a look at some of the important points that you need to consider when you are applying for a loan:
Taking a loan when you are unemployed is a very big step. You need to make sure that you will be able to repay. Plan your monthly expenses and include your personal loan EMIs in your monthly expenses. After you add these EMIs to your monthly expenses, question yourself if you will be able to repay your full loan on time.
Banks have eligibility criteria to apply for a loan. You will typically be required to earn a minimum income, be a Singapore citizen or a permanent resident or a foreign national with an employment pass, and be above 21 years old. Some banks may be lenient with you regarding their minimum income criteria. However, you will have to meet the other criteria. Apart from the income, age, and nationality criteria, you will also have to meet other criteria such as not being bankrupt. You should not be paying any other loan or credit card debts while applying for this personal loan. You should not have any outstanding balances from any short-term debts also.
Let us discuss how you can select a good personal loan:
These are some of the benefits of loans for unemployed:
Most banks require you to be employed when you are applying for a loan. You can be a self-employed individual too. However, due to personal reasons, if you are unemployed, you might still get a personal loan if you provide valid reasons and if you prove your ability to repay promptly.