If you are currently unemployed and facing financial difficulties or being let go from your current employment, understanding which financial institutes and government benefits available to help you is important. Before you jump into any decision about how to handle your finances, it is important that you explore and understand all of your options. You first want to make sure you are receiving all of the benefits you are entitled to during your time of unemployment. If you are in need of a loan make sure you are applying for the right type of loan for your situation.
Compare Unemployed Loan Options
Loans for unemployed Australians are hard to come by, generally payday type lenders advertise their services. These may not be the best option and can put you in a worse position. Engaging with the wrong lender can seriously affect your financial situation. Below are some tips on how to avoid bad lenders.
• Check business reviews online
• Check for complaints about the business online
• Search comparison sites for options but be careful, these sites generally promote businesses that advertise with them.
• Check with ASIC that the business is licenced
These points will help you avoid toxic loans or falling victim to scams.
Quick view – See loan and benefit options for specific circumstances here.
Below are multiple loan and money assistance programs for those who are unemployed
Many loan options for unemployed are advertised as short term loans and range in size from $100 – $2000. These loans may come with a high cost of borrowing with application fees of 20% in addition to monthly fees and additional charges should you be late or miss repayments.
A large percentage of unemployed loans are applied by those collecting government benefits. To qualify with lenders willing to lend to the unemployed, you’ll need an additional source of income outside of benefits.
As per the Social Security Act (SSA) and National Consumer Credit Protection Act (NCCPA), if 50% or more of your income is from benefits, the amount of payments for customers must not exceed 20% of their total income.
If you are in need of quick cash and are on benefits, a Centrelink Advanced Payment may be more suitable – there are no fees or interest attached to the advance, see chart below for more detail.
As soon as you lose your job, you should apply for the Newstart Allowance program. This will help cover some your basic living expenses until you are able to find a job. As long as you are 22-years old or older and not old enough for Age Pension, you may qualify for this program. You will receive a regular payment of up to $699.90 fortnightly depending on your specific set of circumstances. This may also entitle you to other great benefits, such as Rent Assistance, a reduction in your utility bills, a Clean Energy Supplement and an Income Support Bonus. You will also receive special support services to help you find a job faster. Here is a list of benefits available for those needing help with various financial issues.
If you aren’t collecting Centrelink benefits yet, visit the Centrelink estimator and calculator to get a strong idea on what type of financial assistance you may qualify for. This is a quick way to see if the benefits are worth your time applying for based on your situation. Applying for unemployment benefits isn’t a quick process.
If you are receiving benefits from the government, you may be eligible for Centrepay. This program allows you to pay certain bills, such as utilities, phone, rent, child care and medical services, right from your Centrelink payments. Many companies throughout the country work with Centrepay and will allow you to pay any outstanding balances slowly over time. This also works to keep your payments more consistent throughout the year, which can help you budget better.
Non-Profit Loan Options For Unemployed
If you have fallen behind on your monthly bills, the first thing you want to do is contact the companies or lenders you owe money. They may be willing to work out a payment plan that is more manageable for you to handle. This could help you avoid the need to obtain a loan. If, after this, you still need a loan, you should consider obtaining one of these no or low interest loans sponsored by the government.
No Interest Loan Scheme. If you are receiving Centrelink payments from the government, you may be eligible for a no interest loan of up to $1,200. These loans are meant to help low-come families purchase necessary household items or make car repairs. It can be slowly paid back over the course of 18 months.
StepUp Loan. These loans allow low-income families the ability to take out a loan for up to $3,000, with a very low interest rate. These funds can be used for any household, personal, or domestic purpose, such as a car or computer. There are no added fees or charges associated with this loan and it can be slowly repaid over time.
Apply with a co-signer. If you are between jobs or have some sort of stable income stream, apply with a co-signer maybe a option. Whilst loans for unemployed people are hard to qualify for a application with a co-signer who has a solid work history can make things easier.
Popular Unemployed Loan Option Details
Things to know before applying for a loan while unemployed
Before you try to obtain a loan, understand that the likely hood of you actually qualifying from a mainstream lender is minimal. In addition, multiple loan application submissions can actually hurt your credit score. Assistance through family, non-profits or the government may be more beneficial.
If you are applying for a loan to pay your bills, try reaching out to your creditors and service providers first to see if they will work with you; in many cases they may provide you with a month or two lapse in payment until your obtain another job. One of the most important things you should take advantage of is the governmental benefits you are entitled to because this can assist you many of you bills. Having income protection is also of great benefit.
There are multiple government services that provide financial aid for emergency situations in regards to day to day living needs – Services such as Crisis Payments and Community Engagement Offices.
Avoid Cash Advance Loans
Unfortunately, there are many companies out their offering instant cash loans to people who are unemployed. While this may sound like a great option at first, it is vital that you read the fine print. Many of these loans come with extremely high interest rates and you will be paying back a substantially higher amount then you originally borrowed. In addition, if you do not get a job as quickly as you thought you would, you will have trouble paying this loan back. This may cause you to be charged extra late fees that can add up over time. Also, if you used anything for collateral, such as your car, you may actually lose it if you are not able to pay the loan back in a timely manner. These types of loans should be avoided at all costs.
In addition to looking for financial help while unemployed, read about other services available to help you while dealing with unemployment.