Personal loans for the unemployed: What you need to know

There’s a not-very-funny old joke about applying for personal loans that was probably familiar in the Great Depression days of the early 1930s. It concerns how difficult it is for an unemployed person to get a bank or any other type of loan. It's a very cynical, rather than humorous statement. It is: When you apply for a loan, you’ll be required to list enough collateral or assets to prove you don’t really need the loan.

There is a grain of truth to the bad joke. For the past several centuries, and especially during bad economic times, banks have insisted on the borrower to put up whatever assets are available. They often include car, house, furniture, jewelry, farm crops and animals and other items that the bank can seize if you fail to make a payment on your loan.

During the Great Depression of 1929 to 1933, it was a common sight in cities and towns throughout the country to see unhappy families huddled on the sidewalk as repossession movers emptied their houses in what was called a sheriff’s sale. Unfortunately, some of the same scenes are happening in today’s shaky economy, and can happen to those who've lost their jobs.

If you’re unemployed and need a personal loan to help you feed the family and pay the mortgage, there are agencies and banks where you may seek help. First of all, however, it is usually a bad choice to go to a personal loan company, with names that include the words quick loan, liquidate your loan or immediate cash available.

Their come-on ads usually don’t require collateral and promise you’ll be completely debt free in a short period of time. The actuality is that by signing with one of those companies, your current loans may be paid off for the moment. However, you’ll find yourself obligated to pay the quick cash company the entire amount over a period of time, plus very high interest rates.

Your best bet for getting an honest loan to pay your expenses while you’re unemployed is to deal with an established bank. You’ll need a good credit record, as well as significant collateral, such as a house or paid-for quality car.

Another avenue you should explore is if you may qualify for government grants, such as for education or for a start-up business. While grants are gifts and require no repayment, government loans usually have a very favorable repayment schedule. There are many loans and grants available in amounts up to $50,000.

Source:www.helium.com