Questionnaire: Can I Get a Bank Loan in Redundancy?
Just because you have been made redundant it does not mean that lenders and banks will start closing their doors to you. If you have been made redundant you will inevitably find it harder to persuade a bank to hand over lots of money to you, but there are circumstances in which a bank will still be willing to give you a loan.
These few questions should help you determine whether you will be seen as a good or bad risk for a bank loan.
1, Was Your Redundancy Forced?A) Yes, I had no choice in being made redundant
B) I volunteered for redundancy
C) I took early redundancy so I could retire
2, Other EmploymentA) I was made redundant from my only job
B) I do some self-employed work occasionally
C) I have another part-time job
3, How Much Did You Get In Redundancy?A) My redundancy package was very small
B) My package was around three months wages
C) I received a hefty redundancy package
4, What Assets Do You Have?A) I have no other assets and I am renting my property
B) I co-own a property
C) I have a mortgage on a property
5, Other CashA) I don’t have any savings
B) I have some savings
C) I have substantial savings and other investments
If You Answered Mostly AsBanks will only lend money to people they think have a good chance of paying it back. If you don’t have a job you will need to show them that you can pay it back some other way.
However if you answered mostly A it seems from your answers you do not have any means to pay back the loan once you have borrowed the money. If you have just been made redundant and need a loan for something that is non-essential then you may wish to wait until you have a new job.
If you have found yourself in dire straits and a loan is your only option you may want to speak to a debt councillor to look at ways you can reduce your outgoings, so a loan is not essential. If however you can get someone to act as a guarantor for the loan a bank may reconsider.
If You Answered Mostly BsThere are some circumstances in which a bank will offer you a loan even if you are redundant. Banks are normally quite generous to anyone who has any kind of income, so even if you have lost your main job but have some form of income coming in you will have a better chance of getting a loan.
If you answered mostly B it seems you have some assets and some form of savings that you could use to pay back the loan. It would be better if you could use your savings instead of taking out the loan but if you can’t for any reason a bank will still look at these as a form of asset and these will help you get a loan.
If You Answered Mostly CsIf you own your own home and can show that you are able to meet your monthly mortgage payments you may be able to take out a secured loan, which is secured against your property.
If you answered mostly C there should be a way for you to be able to get a loan from the bank as long as you do not want to borrow more than you can afford to pay back. A lender will deem you a good risk if you have a large amount of savings and you received a substantial redundancy package.
It is not ideal to take out any kind of loan when you are redundant and you should always look at other ways to raise the money you need. If however you can prove that you can pay back the money and that you have a guarantor to back you up if you can’t you may be able to get a loan.
If you do get a loan you should try and borrow as little as possible to cut down your risk of defaulting. Once you have your loan you should use it to consolidate some of your existing debt and try and get your finances in order.