The Confederation of British Industry (CBI) expects levels of unemployment to grow to in excess of 3.1 million people during 2017. Unemployment causes a drop in net household income resulting in financial difficulties. However, there are sources of finance and loans for unemployed people available, such as logbook loans, pawnbroker loans, credit card cash advances and family loans.
Can a Family Loan for Unemployed People Help?
A family loan is the cheapest source of loans for unemployed people. It involves borrowing money from a family member to help with short term financial difficulties to avoid high APR personal debt. Family loans help unemployed people through money problems, buying them time to get back on their feet.
Credit Card Cash Advances to Help with Short Term Financial Difficulties
A credit card cash advance involves either withdrawing money from a cash machine or using a credit card cheque. They represent a cost-effective source of loans for unemployed people, especially when compared to the high APR on Logbook loans and pawnbroker loans.
Financial institutions allow unemployed people with existing credit arrangements to use some of their credit limit to take a credit card cash advance. Price comparison site, uSwitch.com, estimate that the average APR on a credit card cash advance is 29.97%.There are in the region of 7.3 million people taking advantage of them already.
Logbook Loans for Unemployed People with Money Problems
Unemployed people may wish to borrow money with a logbook loan to assist with financial difficulties. Logbook loans lend unemployed people money on the basis of using the family car as collateral. A logbook loan for unemployed people should only be considered a short term borrowing source as it charges a high APR of in excess of 1000% and will increase personal debt.
Do High APR Pawnbroker Loans Create Personal Debt Problems?
A pawnbroker loan provides a personal loan for unemployed people based on the provision of collateral, such as electrical equipment. Most pawnbroker loans are for between £50 to £150. The term available for this loan for unemployed people is up to 6 months.
Pawnbroker loans are a more expensive source of loan for unemployed people than a credit card cash advance and family loans, but are cheaper than logbook loans. They charge a high APR of 8% per month or £8 per £100 borrowed which may serve to exacerbate personal debt problems.
Loans for unemployed people are fewer in number due to the higher risk posed to lenders. However, it is still possible to borrow money to deal with short term financial difficulties. Unemployed people should always seek to utilise existing sources of credit, such as credit card cash advances and personal overdrafts, to get the best rates and avoid personal debt.