Paying off multiple debts each month can be a daunting responsibility, even for individuals with a steady income. Debt consolidation provides an approach to help you clear all your debts by taking one massive loan and paying it off at a lower interest. But the main question is, can you qualify for a debt consolidation loan if you are unemployed? Read on to learn more about how the unemployed can consolidate their loans and tips to increase acceptance.
Can the Unemployed Qualify for Debt Consolidation Loans?
You can qualify for debt consolidation if unemployed, but it has several challenges. Note that consolidating your debt means the lender gives you a new loan to pay off debts. They’ll want proof that you can get timely monthly premiums on the new loan. Being unemployed means you lack a steady source of money and are more likely to struggle with payments.
Luckily, lenders like Symple Lending understand such situations and offer products to fit the unemployed. They understand that even the unemployed can have other sources of income apart from the traditional paycheck. Unemployed individuals with the following income streams are more likely to secure debt consolidation loans from various lenders;
- Rental income
- Child support
- Investment earnings
- Pension funds
- Alimony
- Inheritance
- Regular payments from previous settlements
- Disability payments
Not having a steady source of income will lower your eligibility to consolidate your debt. You can consider putting up collateral to increase your chances of qualifying; it can include personal assets like cars and houses.
Tips When Using Debt Consolidation While Unemployed
Consolidate If You Can Make the Monthly Payments
Getting a debt consolidation loan does not entirely relieve you from your debt burden. You’ll still have to pay off the new loan and need some income. Consolidate your debt only if you have somewhere you can get money to make payments. It could be a part-time job or freelance work. It’d help to consider other sources of debt management if your bank accounts are overdrafted and you lack income.
Timing is Everything
Timing is an element most first-time borrowers tend to overlook when consolidating their debt. If unemployed, it’d help to estimate how long you’ll be without an income. Only consolidate when you are sure the job market is good, and you can secure another position in the next few months. If there is a slow job uptake, avoid consolidating, as it may increase your financial stress.
Explain Your Situation to Lenders Upfront
Instead of hiding that you are unemployed from the organization helping, why not be honest about your situation upfront? Disclosing that you lost your job and have limited income will allow the lender to evaluate your situation realistically. If unsure, find experts like a knowledgeable associate at Symple Lending and explain your situation for a more professional evaluation.
Being unemployed will make it harder for you to consolidate your debt, but several firms are ready to help. Start by reviewing your situation before applying for the loan, and use the tips mentioned to help decide whether it’s ideal to consolidate. It’d also help to consult a professional financial advisor for expert advice.