Payday Loans for the Unemployed

 

 

If you are unemployed, you may wonder if you are eligible for a payday loan if you have a financial emergency. The short answer is yes, there are payday loan companies that offer short-term loans to the unemployed. Before taking a payday loan, you should understand what this type of short-term loan is and what special requirements and restrictions may apply to your unique situation.
What is a Payday Loan?
A payday loan is a short-term loan. These loans are usually paid back within seven to 30 days of the date of the loan. Payday loans have very easy qualifying requirements and fast approval.
Payday loans do not require a credit check, but they do require that you have a steady income and an active bank account. They also require that you be over the age of 18 and a valid form of identification, such as a driver’s license or a state-issued ID card.
Payday loans charge very high interest rates – 300 to 900 percent APR and upwards – and very high fees.
Special Unemployment Requirements
With such high unemployment rates over the past few years, payday loan companies have developed special short-term loans for the unemployed. These requirements center around a person’s ability to pay back the loan and access to funds for repayment.
One of the restrictions on payday loans if you are unemployed is that the loan amount is usually no more than the amount of your weekly benefit. For many borrowers this does not amount to a great deal of money, and so a payday loan may not be worth the effort or the high interest rate and fees associated with this type of loan.
Another restriction is that payday loans may not be available to you if you live in a state that still issues paper unemployment checks. Many states have converted to a system that is similar to the food stamp program and in which debit cards are used to deposit funds for unemployment benefits. Many payday loan lenders will only provide loans to individuals who have access to the debit card benefit system.
Disadvantages of Payday Loans for the Unemployed
If you are unemployed you are probably already struggling financially. Unemployment benefits are usually considerably less than what you would be taking home if you were working. If you are having difficulty making ends meet, then you may compound the problem by taking out a payday loan.
Payday loans are loans in which the rates of interest and fees are extremely high for what is a mere few weeks of lending money. Unfortunately, repayment terms are generally very steep and even if you get the repayment period extended, you will still be behind on your payments. This can lead to further financial hardship, since catching up financially becomes almost impossible with a payday loan and soon you are stuck in a never-ending cycle of needing additional loans because you become chronically short of cash.
While payday loans may seem like an attractive solution to the problems of not having enough money if you are unemployed, the may simply compound the difficulties involved. There are special restrictions placed on payday loans for the unemployed, which may make taking out this type of loan unpalatable.