Unemployment Loan

With or without credit bureau – credit for the unemployed does exist.

With or without credit bureau - credit for the unemployed does exist.

Sometimes such situations occur when you urgently need money. This is especially true for the unemployed. For example, you need to have a car repaired, pay for heating or even move to find a new job. So they start thinking about a loan and looking for suitable offers for their request. But the fact is that the selection is not that big.

When applying for a loan, you have to state the amount of your income and the source of your income because assessing a customer’s creditworthiness is the main criterion for lending. The logic is clear: Without a fixed income, you cannot pay back the money. The banks do not want to take the risk and refuse to grant loans if they have no credit rating. What types of credit are there for the unemployed? And is it even possible to get a loan if you cannot prove your income as security?

Bank loan with special guarantees

Bank loan with special guarantees

On the one hand, the unemployed receive a monthly amount – the unemployment benefit, and for some this amount is even higher than the average earnings of working people in Germany. A kind of regular receipt of money. On the other hand, unemployment benefit is designed so that people without work have enough money to buy or pay for the most necessary things. This does not include debts. That is why unemployment benefit is not an option for banks. Instead, they can request additional or special collateral:

  • A co-applicant or guarantor (e.g. a friend or family member with a good income). However, they are not very helpful, because the income must be attachable.
  • Valuables such as car, valuable jewelry, etc. (if only by small amounts).
  • Life insurance (as a policy loan).

Loan from the employment office

Loan from the employment office

The Federal Employment Agency is a good alternative to the bank. The loan from the employment office is, so to speak, a social program and therefore absolutely free of interest. Even low rates give additional flexibility (5-10 USD / month). However, this is a strictly earmarked loan, which requires a thorough review of every situation and only serves the purpose specified in the contract (e.g. paying a rent deposit, buying a new fridge or clothes for the children, renovating the house).

credit markets

credit markets

For unemployed people, there is another alternative that offers credit exchanges on which private donors lend money. Although a credit check is also carried out here, you can get a private loan from a negative credit bureau or even without a credit bureau. This means that the unemployed have the same opportunities as everyone else to fund their needs with private donors. Private donors decide who they want to work with.    

foreign credit

foreign credit

A foreign loan without credit bureau is normal because foreign banks do not query credit bureau. However, they check the creditworthiness and, like in Germany, require certain collateral. This means that a point with proof of income for the unemployed can also be problematic in this situation. But some credit institutions   (for example Swiss banks) place little value on types of incoming cash or collateral against correspondingly higher interest rates (up to 15%).

Conclusion: A loan during unemployment is possible in principle, but under certain conditions.