Over a third of payday loan borrowers don’t have a salary to help them pay off their loan. A responsible lender will make every effort to ensure that their borrowers will be able to repay the loan. Therefore, most lenders prefer not to lend to people with no regular salary, such as students or people without a job.

Despite this, a recent poll of over 8,000 borrowers by Readies showed that 36% of loans taken out are payday loans for the unemployed or students.

Payday Loans for Unemployed UK

In this article, we will look at why unemployment can drive a person to payday loans. We will also take an objective view of when payday loans may be a reasonable option, and when they just make things worse. Payday Loans Net is a responsible direct lender who genuinely cares about its customers. We hope that this article will help anyone who has lost their job to stay in control of their finances, and avoid being sucked into a whirlpool of debt.

Losing your job

Losing your job can be a shock, especially if you didn’t see it coming. It can be hard to get yourself into the swing of things, brushing up your CV and applying for various jobs while heading for an appointment with your JobCentre Plus office to get your benefits sorted. The financial aspect is easily forgotten – it’s hard to adjust yourself to the reality that there’s no salary going into your bank account at the end of the month.

Using Redundancy Pay

Your redundancy pay is there to help you managed financially until you find a new job. However, along with a lump sum of money comes the temptation to spend it. It’s important to realise that the redundancy pay is almost like your emergency rations, to last you not only until you get another job, but until your first pay check, which can be up to a month later.

If this pay runs out, then it is tempting to turn to payday loans for the unemployed. If there are no job offers on the horizon, this is not a good move. As its name suggests, a payday loan is designed for those who have a payday, and can pay off the loan when their wages come in. If you don’t know where your next meal is coming from, then how will you pay off the loan? Will you take out another loan to repay it, and another and another until you’re deeply in debt?

If, however, you have already secured a job, or are very certain that you will be hired, then it may work for you to take out a direct payday lenders until you receive that first pay check. Or, if you are in the process of securing your unemployment benefits, you may want to borrow a payday loan until the money comes through. In these circumstances, then a payday loan may be a reasonable option.

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The important thing to remember is – do I know that I have money coming in soon? Do I know how I will pay off this loan? If the answer is no, then do your best to manage without a payday loan.

Alternatives to Payday Loans for Unemployed

Remember, in any situation, always examine any other options you may have before turning to a payday loan. Borrowing from family or friends, spending on a credit card, arranged overdraft and credit union loans are all reasonable alternatives. You should explore these before applying for a payday loan.

Job Seeker’s Allowance

As mentioned above, these benefits can take some time to come through. To receive them, you need to complete this online form. You should receive a text or phone call within two working days to arrange an interview at your local JobCentre Plus office. This all needs to happen before you can start receiving any benefits.

In the meantime, you may need money for your basic expenses. If you are sure that you will receive payment soon, and there are no suitable alternatives, a payday loan may be a reasonable option for you.

How much can you expect to receive? In the table below, we’ve put some useful information about this.

How much Job Seeker’s Allowance you will receive
Age Weekly Payment
18-24 Up to £57.60
Over 25 Up to £73.10
Couples (both over 18) Up to £114.85

Will this be enough for you? You may have high rental costs that will eat up most of it. It may be an expensive time of year, such as the holiday season, so you may be looking to supplement this payment. If possible, try to earn the money by selling some items you don’t want or need, offering your services in anything from typing to dog walking, or even answering surveys online. If these aren’t an option and you really do need to borrow money, then be sure to limit how much you borrow as without an income you may be hard-pressed to repay any loans. Again, research all your options thoroughly before turning to payday loans for the unemployed.

Finding a New Job

Depending on your skill set and flexibility, finding a new job may be fairly simple or extremely complicated. It’s great to be optimistic, but this doesn’t mean you should assume you’ll be hired right away. Plan for the long term, live as minimally as possible, and stretch out your redundancy pay as far as it can go. Remember, travelling across the city to attend job interviews can end up costing you quite a lot. You don’t want to turn to payday loans just to help you apply for jobs.

Many people underestimate how hard the job search can be, especially if they’ve been in employment for a long time. The job market has become more aggressive in recent years, and some sectors of employment have become saturated with applicants.

It is common for people to run out of money before finding a job. Many turn to payday loans for the unemployed as the answer. This is not a good idea, as they may still be unemployed when the repayment date rolls around, leaving them in even more trouble than before. Asking a debt charity for advice is usually a good idea. This is because they are used to helping people in these situations, and may offer a new solution.

Payday Loans for Unemployed from direct lenders

A period of unemployment is a stressful time. The financial pressures can be tough, but payday loans for the unemployed is not usually good solution.

By design, both instore and online payday loans are meant for people who have a regular payday, and will be able to pay off the loan within a month. Having no assured source of income makes these loans dangerous for the unemployed, as the debt builds up fast if a payment is missed.

Yet according to the aforementioned poll, a full 29% of payday loan borrowers were unemployed. So are payday loans for the unemployed ever a good idea? If you know that you will be receiving money soon, either from a job you’ve been offered, the benefits payment that will come through soon, or elsewhere, then a payday loan is a reasonable option.

Chloe Winters
Chloe grew up in the countryside, but came to the city to pursue a career in economics. She fell in love with the abundance of shops, and quickly developed a passion for fashion. After blowing her first salary on a shopping spree, she realised that budgeting is the only way to go. Now, Chloe is a budgeting queen – and still manages to dress like a superstar. She loves sharing the advice and tips she gained along the way, and is excited to be part of the Payday Loans Net blogging team. Her advice to you: If I can do it, anyone can!

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