The increase in COVID-19 unemployment benefits has helped millions of Americans make ends meet during the pandemic, but analysts have found that some were actually earning more staying home than they would have earned in going to work.
Because of this generous unemployment benefit, many politicians have argued that unemployed Americans have less incentive to return to the workforce. In fact, about half of states ended supplemental unemployment assistance in the event of a pandemic early in June to deal with a growing shortage of workers.
Although unemployment benefits expired for the 5.3 million Americans in early September, hires will only increase by about 1.3 million through the end of 2021, according to Goldman Sachs analysis released on October 4.
“The current labor shortages reflect a perfect storm of factors that have dramatically reduced the supply of workers who are currently looking for work while the demand for labor, as measured by vacancies, reached an all-time high. “
Goldman Sachs analysts have provided some suggestions on the impact of the coronavirus pandemic on the workforce:
- Many workers have taken advantage of the pandemic to take early retirement. There are 1.5 million surplus retirees, which represents around 0.6 percentage point in the labor market.
- Self-employment increased by over 800,000. Self-employment has increased at the highest rate in the construction industry, where labor shortages impact the supply chain.
- Visas issued to immigrants and temporary workers declined by about 700,000. Analysts do not expect immigration declines linked to the pandemic to be offset by higher immigration rates in the future.
Yet many Americans are simply out of work and without surplus pandemic unemployment benefits. If you’re unemployed and need cash now, consider a few options to help you out, like emergency loans and mortgage refinancing.
If you decide to borrow money to make ends meet, visit Credible to compare rates for various financial products. This ensures that you get the most competitive interest rate for your financial situation.
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3 Ways To Get Money Now If You’re Unemployed
Predatory short-term loans for the unemployed, like those offered by payday lenders, can come with high interest rates and incredibly short repayment plans. Fortunately, there are other borrowing options for unemployed consumers who need fast online loans. Consider the following:
- Finding emergency loans
- Borrow from your retirement account
- Leverage your home equity
Keep reading to learn more about loan options for unemployed borrowers.
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1. Look for emergency loans
Emergency loans are typically a type of unsecured personal loan offered by a bank, credit union, or online lender. They offer a small lump sum financing that you pay back over a set period of time, usually several months or years.
Personal loans can be a good option if you need cash quickly, as your funds can be deposited into your bank account as early as the next business day after loan approval.
Because personal loans are unsecured and do not require collateral, you can use the money however you want. But qualifying for this type of cash loan can be difficult if you are unemployed, as lenders determine eligibility based on your annual income, credit rating, and other financial criteria.
Even if you are currently unemployed, you can still qualify for this type of loan if you have a strong credit history and an alternative source of income, such as Social Security, child support, or alimony. But without a stable source of income, you might only benefit from offers with higher interest rates and additional fees. Still, personal loans are a good alternative to high interest credit cards and payday loans.
You can check your loan options with several lenders without affecting your credit report on Credible. Once you have an idea of your estimated interest rate, use a personal loan calculator to estimate your monthly payments.
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2. Borrow from your retirement account
Another option for emergency money is to borrow a 401 (k) loan. Borrowing from your retirement account essentially gives you a cash advance on your 401 (k) with a low fixed interest rate and a flexible repayment schedule.
Since you are borrowing money from your own retirement savings, you will not be subject to a credit check. For this reason, these types of loans are popular among borrowers with bad credit rating.
However, not all pension plans allow you to borrow on your 401 (k), and many require you to work while you borrow. However, it is a good idea to check with your financial institution if you are an eligible borrower.
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3. Leverage the equity in your home
Hospitality values are at an all time high and mortgage rates still hover around 3%, according to Freddie mac. These are favorable terms for homeowners who wish to take advantage of their home equity through cash mortgage refinancing.
Cash-out refinancing involves taking out a mortgage that is larger than your current mortgage and pocketing the difference in the form of a lump sum. Your new mortgage will have different repayment terms, such as the interest rate and the monthly payment.
A similar way to leverage your home equity is to take out a second mortgage in the form of a home equity loan or home equity line of credit (HELOC). These different types of loans allow you to borrow against the value of your home with a new loan, while keeping your current mortgage.
The main disadvantage of borrowing against the equity in your home is that you risk losing the roof over your head if you cannot make payments. But borrowing against the equity in your home usually allows for lower interest rates and less stringent eligibility criteria compared to unsecured loans such as personal loans.
Contact an experienced loan officer to see if home equity loans, HELOCs, or cash mortgage refinancing can help cover your expenses.
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