Unemployed people find it particularly difficult for banks and savings banks to obtain a loan. As a rule, they do not have any attachable income, which the bank could fall back on if interest and principal payments fail. So how to secure a loan for the unemployed, which is urgently needed, but can not be supported by any income?
The loan for unemployed at the bank
Whether the bank grants a loan for the unemployed depends heavily on the securities that should make up for the lack of regular income. On the one hand, these may be assets that the applicant already holds or, on the other, acquaintances or relatives who make themselves available as guarantors or co-applicants. Without one of these collateral, it is almost hopeless to get a loan from the bank.
The guarantee is one of the most popular alternatives used for a loan for the unemployed.
A guarantor assists the claimant by providing repayment of the loan with his own funds. This, however, only if he is overwhelmed with the regular payments or this can not afford for other reasons or wants. From this point onwards, the guarantor will be liable directly for the maintenance of the debt service, ie the interest and principal payments until the loan has either been paid off or the borrower can pay for it himself.
The same applies to the co-applicant, whereby he is liable from the beginning on his own and thus is more closely bound by the contract. However, both must have the necessary collateral to qualify as either a guarantor or co-applicant in a loan for the unemployed. This means above all, that a regular income must be present and no negative credit entry should be available. The latter, however, also depends on the amount of income that is available.
If the applicant already owns a property, it can also be brought into play. This works with the help of a mortgage or a mortgage. The latter is more popular with debtors as it allows more flexible handling. Unlike the mortgage, the mortgage is not tied to a particular debt relationship and can be used after it has been paid off, for example, to secure another loan.
If the property is owner-occupied residential property, which may still serve as retirement provision, then as a borrower you will have to think twice about whether it is used to secure the loan. Because by a land register entry, the bank can assert its claims to this, if the disbursement does not take place in the agreed manner. A loan secured for the unemployed in this way is therefore associated with a much higher risk for the applicant.
Finance through life insurance – the policy loan
A completely different way to the loan for the unemployed can be found in their own life insurance. Very few policyholders know that you can borrow the current surrender value of a life insurance policy, even at relatively favorable terms. This process is also referred to as the mortgaging of a life insurance and can of course only work with capital-forming life insurance, not with term life insurance.
In order to borrow the amount, the policy must have a corresponding maturity, otherwise there may not be enough capital available. With the help of a policy loan investments can be made on relatively favorable terms, as the insurance company has only a minimal risk to bear in the matter. After all, the insured person is entitled to the capital anyway, albeit at a different time.
This variant should also be given preference, if one should tend due to various rejected loan requests to sell the policy on the secondary market or, even less, to terminate the contract simply. The latter would only bring the current surrender value, but the protection and the associated precaution would be irretrievably lost.