Emergencies do not give the lowdown before knocking on your door. They more than not catch you on the wrong foot, and therefore, financial experts suggest having an emergency cushion worth at least three months of living expenses.

Unemployment is the most common scenario when you may need to fall back on your rainy-day fund. It is hard to project how long you will land a new job, so it makes sense to have it enough to tick over.

The good thing is that you can apply for unemployment benefits, too. They may help you get by unless you are in the saddle. Financial help is always out there in case you fall short of cash.

Emergency cash loans for unemployed in Ireland are small loans to help you fill the gap in your savings. They are particularly aimed at meeting only essential expenses. You should never use them for fun and entertainment or anything you can put off.

Here are the key points:

  • Emergency loans are similar to payday loans.
  • The repayment length is very small, and interest rates are high.
  • They include a soft credit check, so you do not need to lose your credit points.

What you need to qualify for an emergency loan

It is not complicated to qualify for an emergency loan. You can apply for them by submitting an application form online at your lender’s website. The basic eligibility criteria are the same. However, since you are unemployed, you will have to show a passive income source to prove that you can repay the debt.

Do not assume that you do not need income to qualify for emergency loans in Ireland. A lender would want their money back, and they must check your repaying capacity. As you cannot have a full-time job, you can show your income from sources like:

  • A part-time job
  • Freelancing
  • Rental income
  • Dividends and interest payments
  • Side gig like walking a dog

Things to consider before applying for an emergency loan

You should ensure that you can repay the debt on time. The repayment length of these loans is about a month. Your lender will expect you to pay back the whole sum. Because they are subject to high interest rates, you will find it hard to get rid of them. Most people think they are convenient and apply for them when cash is tight.

Upon the payment, they figure out that they are left with insufficient cash to meet the essentials, which leads them to borrow more money. This cycle goes on, and you, in the end, find yourself in the loop.

Here is a real scenario: how John racked up a €200 loan to €4,000 in a month.

John needed extra cash in February when he lost his job to pay his rent. It was quick. Within a few minutes, money landed in his account, which pushed him into a debt spiral. He had been earning through a freelance project and receiving unemployment benefits. He saw an advert for a lender offering small loans from €100 to €200. The following month, when he paid off the loan, he found himself short of cash for the essentials, so he borrowed from another lender again and again. Unfortunately, this cycle continued, and he eventually found himself with a whopping debt worth €4,000. His mental health suffered. In retrospect, he thinks that he was stupid.

In addition to your repaying capacity, you should make sure you do not borrow for discretionary expenses. These loans are aimed at meeting essential expenses. In case you are borrowing money with a bad credit score, you will be charged even higher interest rates. There are things that you may need but can be postponed for a while. If so, you should avoid borrowing money for them. Save money instead.

Here are the purposes for what you can use these loans:

  • Utility bill payments
  • Rent payment
  • Car repair

Essential features of emergency loans for the unemployed

Here are the two essential features of emergency loans for the unemployed:

  • Quick disbursal

You need a quick injection of cash when you have come across some emergency. Unemployed people can take out a loan without documentation of a bank statement. You just need to provide details of your income and expenses in the form that your lender will use to decide on approval. Another reason for a quick processing is that a soft credit check is made.

Beware of lenders who provide you with emergency loans without a credit check. No lender is authorised to sign off on without an affordability check. Such lenders may be scammers. They will charge extortionately high interest rates to make money. You should carefully check the authenticity of a lender. Do research. Check if they are registered and what people say about their lending practices.

  • No collateral and guarantor

You can qualify for unemployed emergency loans despite a poor credit report. While some loans may ask you to arrange a guarantor, you do not need that for unemployed loans. You do not even need to secure it against any property.

Risks linked to unemployed loans

Only if all other alternatives have been exhausted should you take out unemployed loans. They come with very high interest rates, so be careful of falling into a debt trap. The following tale illustrates a few dangers associated with them:

Annual ratesYou should make your borrowing decision based on annual rates. They can be up to 1500%. It is the annual percentage rate that makes these loans add up so quickly.
Penalties are highA missed payment will attract late payment fees. Interest will be added to the late payment fees, too, making the debt larger.
A shorter repayment lengthThe loan is paid back in a month. It can be harder to settle your account.

Do unemployed loans affect your credit score?

Your lender will run soft checks at the time you apply for these loans. Because soft inquiries are not visible, you can protect your credit points from plummeting.

However, as far as credit score improvement is concerned, they cannot help you at all. Since the payment is made in full, it cannot give clarity about your loyalty towards payments.

But you will lose your credit points if you fail to make your obligation. It is vital to pay off your debt on time, as the ramifications will be dire. Not only will you lose your credit points, but you will also struggle to qualify for money at lower interest rates down the line.

To sum up

Emergency cash loans for the unemployed are specifically aimed at meeting your essential expenses. They are small in size and paid back in full on the due date. You can apply for them online by providing details of your income and expenses. In the absence of passive income, unemployment benefits will be regarded as your income. You should carefully analyse your repaying capacity so you do not fall into a debt trap.

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