loan
  • May 24, 2022
  • admin

Although UK’s unemployment graph has fallen to its lowest in the 50 years, individuals are still facing the fire amid soaring inflation. The cost of living like energy bills, food and loan borrowings are on the rise at an alarming rate. It is taking a toll on employers and employed individuals:

  • Brexit
  • The Ukraine-Russia war
  • The pandemic impacted the economy significantly in the past few months

According to a source, “5.3 million individuals “fit-for-work” but unemployed relies solely on state grants”. The figure is roughly equivalent to Scotland’s population. The section encounters the harshest blow of inflating the cost of living and hardly has any cushion to decelerate the fall.

Rising prices and increasing welfare payments make individuals rely more on short-term borrowings like payday loans or doorstep loans 4 unemployed. The easy and instant availability at minimal income requirement has fumed up the borrowings in the past few months. They slashed income and depleted savings amid sustaining the rising costs, which are the primary reason behind increased borrowings.

Individuals are using these high-interest loans for rental payments, pay for food, medicines, etc. In short, individuals are seeking different ways to cover emergency costs. Some seek additional ways to secure a pay hike even in unfavourable circumstances. As per data from Organisation for Economic Development and Cooperation, “A single and child-less unemployed person in Britain could receive 15% of the income from the country’s universal credit system” The situation is pathetic.

Amid this, individuals with multiple borrowings struggle severely to meet the repayment deadline. Most of you must be thinking, “What will happen to my loan now?”

What Happens to Your Loan After You Quit the Job?

Unemployment could impact your loan repayments severely. You may encounter a hard time convincing your lender of your circumstances. Your lender may find it challenging to continue the loan amid job fluctuations. It might mean losing the dream or the loan.

Some lenders ask for an additional income source to continue the loan. The income sources you may reveal during unemployment are listed ahead in the blog. You may have to pay more than you initially were on loan.

Even after revealing income sources, borrowers must prepare themselves for surprises as the lender may scrutinise the application. And your chances of securing the loan are relatively low.

However, the loan approval differs according to circumstances.

a)  Your loan application could be denied

After analyzing your current circumstances, the lender may deny you the loan altogether. Certain loans like personal loans, mortgages, student loans or car finance require strong credit and credibility and income requirements. With a change in your employment situation, the lender may deny or cancel your tenant loan application.

b) Your loan application could be delayed

Once you acquaint him with the current employment circumstances, things may change. The lender may put your loan application at a halt. You may have to wait until you can provide some concrete income proof or loan affordability proof to the lender.

c) Revise loan to a smaller amount

When the situation changes, lenders may not provide the amount you previously qualified for. So, if you are comfortable, a lender may agree to a relatively smaller amount.

Analyse your credit score and existing income sources, and minimise the loan amount to suit the present circumstances.

However, managing loans is not entirely challenging.

Is it impossible to manage Loan After Quitting the Job?

Losing or quitting your job out of a business shutdown is distressing. What’s worse is- leaving it at the stake of your dreams. So, should you give up on your dreams owing to circumstances?

No, there is another way to manage the existing loan in such a situation. Here is what you need to do after quitting the job:

1)  Inform the lender about your decision

As soon as you quit your job, the first thing to do is inform the lender about your employment situation. The situation is tricky, and you may be consumed with thoughts that unemployment might impact your tenant loan or mortgage application. However difficult it may seem, doing the right thing at the moment is crucial. The faster you inform the lender about your situation, the quicker they will help figure out a plan.

2) Count additional income source

Do you have any part-time income source?

Some applicants decide to go on with the loan even when they abruptly walk out of a job. Before providing loans for very bad credit no brokers, lenders conduct a few credit checks to ensure the affordability of borrowers. Some lenders offer loans regardless of the current employment status if the borrower can prove the repayment capability somewhat.

What sort of income proof can you provide if unemployed?

There are some income sources which lenders do consider for lending to an unemployed individual. These include:

a) Spouse income proof

You can reveal the spouse’s income source to qualify for the loan if you are married.

b) Income from benefits for unemployed

The government of the UK provides specific grants and benefits to unemployed individuals. These grants are provided with the primary aim of helping these individuals survive through the struggling phase. It is a monthly payment that an unemployed individual receives.

c) Suspend your student loan payments

As per the recent declaration,” individuals can pay off the student loan until 25 years and any remaining amount will be cancelled by the authority.” If you are currently facing financial issues owing to job loss, you can contact your lender and extend the loan repayment term.

Or you can consider refinancing at a lower interest rate (If applicable). In the current inflation scenario, many private lenders provide borrowers with the flexibility to cap the lowest interest rate for the existing loans, doorstep loans 4 unemployed. Check out different offerings by lenders and watch if you could qualify for refinancing to a lower interest rate.

d) Check out new job offers

Securing a new job should be your priority. Start by updating your profile and applying for different jobs online. Here is how you can speed up the job confirmation process:

  • Involve your friends and family members in the job search
  • Highlight the urgency and ability to work as an immediate joiner. It separates you from the rest profiles
  • Explore other fields as well if you do not find any suitable job opportunities in your existing industry.

E) Seek help from existing employer

Are there any employment benefits that you were promised in your previous company? If yes, ask for the same from your previous employer. However, securing one after leaving the job might be challenging, but it is ideal to talk it out once with your employer.

5 Things You Should Be Mindful of Before Quitting the Job

Individuals quit jobs almost immediately. It is important to analyse different aspects before quitting.  Here is how one can be financially ready to the battle tough times like unemployment:

1. Understand your existing circumstances

Before quitting the job, analyse these aspects:

  • Do you have an additional income source?
  • Do you share any passion that you can monetize?
  • How long can you survive without a permanent salary?
  • Are the reasons for leaving a job genuine enough?

Pondering these issues will help you avoid unbearable unemployment issues.

2 - Emergency fund

Have you planned enough for your urgent and immediate expenses?

Do you own an emergency fund?

If not, it is ideal for getting one before leaving the job. Save for at least 6 months before quitting the job. Before issuing the resignation, evaluate your emergency fund amount. Consider all the expenses and the estimated amount you will require to battle off the unemployment or job-search phase. If you can make it, you can think about quitting the job.

Bottom line

So, if you quit your job with a loan, you may struggle to keep up with the repayments. Lenders may decline the loan application or demand security to carry forward the loan. Or otherwise, you can continue with the loan revealing the proof of income from other sources. Refinancing the loan may not be an option every time. It is ideal for planning things out before quitting the job. Unemployment is the worst phase to encounter. Therefore, make sound financial decisions on the existing loan.

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