Which Loan is Better for the Unemployed – A Comparative Analysis

When you lose your job, you feel like a fish out of water. Of course, being jobless is painful, especially when you have no fixed source of income and enough savings to cope up unless you land a new job. Though financial assistance is always out there, you cannot jump to it unless you are certain about your financial stability.

Thankfully, you can apply for unemployment benefits, but they hardly help you meet your regular expenses, let alone financial emergency. Even though you create a budget to take hold of your expenses, you will likely face cash shortfalls.

Financial emergencies can catch up with you anytime, and you end up with borrowing loans for unemployed in the end. Many people regardless of their credit rating take out unemployed loans, but at a certain point, they feel it difficult paying off the loan.

This invokes an intriguing question – do you rely on unemployed loans while you have an opportunity to take out payday loans for unemployed. Here are both types of loans explained in detail.

Unemployed loans vs. payday loans for unemployed

Unemployed loans help you tide over when you have lost your job. However, it does not mean that you can borrow money despite poor affordability. You must have income proof. It includes but not limited to rental income, a side gig, a part-time job and unemployment benefits.

You can get such payday loans as long as you can prove your repayment capacity. You do not necessarily need to get a paycheque. However, the term of these loans is as short as standard payday loans.

Now that you know the basic difference between both types of loans, but there is a lot more you need to understand.


Unemployed Loans

Payday Loans for Unemployed

Repayment length

The term of these loans is longer. It can vary between one month and six months.

The term of these loans is not more than two weeks.

Payments in instalments

Instalments can be weekly, bi-weekly and monthly depending on the size of the loans.

You will pay off the debt in a lump sum.

Interest rates

Competitive interest rates despite bad credit history

High interest rates

Should you apply for payday unemployed loans?

Other loans in Ireland like payday loans may seem a good alternative to the unemployed loans, but they are extremely risky. Two weeks is the common term for payday loans regardless of your employment status. More than 80% of borrowers end up rolling over the loan. The more you roll over, the sooner the cost will add up.

If you have a choice between unemployed loans and payday loans for unemployed, your preference should be the former one.

If you cannot take out unemployed loans due to any reason, you should consider other alternatives.

  • Guarantor loans

Unemployed loans do not come with an obligation. If lenders find poor credibility, they may turn down your application. If you have some issues with your finances, you should take out guaranteed loans. A guarantor with a good credit score will reduce the risk of lender, and hence the chances of approval are likely to be higher. One of the benefits of these loans is you can get money for a longer repayment term at lower interest rates.

  • Title loans

Finding a guarantor is a quite tough job. People fight shy of acting as a guarantor because your repayment incapacity can worsen their credit score too. Nobody would ever like to help you at the cost of their credibility.

When you find it difficult to arrange a guarantor, you should try to take out title loans. These loans are kind of secured loans. You will use your car as security. However, you must remember that you will lose your secured asset if you fail to pay off the debt on time.

  • Cash advance

You should cash advance as a last resort. It is a process of withdrawing cash against the credit line. This option is the most expensive one. Use this option only when you are in dire need of money.

To summarise with, the best funding source during unemployment is unemployed loans. No matter how affordable payday loans for unemployed seem, try to apply for unemployed loans. In case you fail to qualify for the loan, you should consider other alternatives such as guarantor loans, title loans and cash advances.


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