When it comes to the question of whether a loan is possible for the unemployed, a basic distinction must be made as to whether it is a loan for ALG I or ALG II recipients. In the former case, additional collateral, high unemployment benefits, a guarantor or a co-applicant can very well help make it possible to grant loans. With an ALG II receiver, however, this is not the case under any circumstances. You can only get a jobless loan if you contact your local job center and can provide a valid reason to borrow.
Loans for ALG I recipients
Neither a German nor a foreign bank makes it easy to get a loan for the unemployed. The loan offers are primarily aimed at employees or civil servants who can demonstrate secure income and positive Credit Bureau information. However, all other groups of people, including self-employed or freelancers, find it very difficult to obtain an installment, consumer or overdraft facility.
Another problem with unemployment benefit is that it is paid regularly but is a social benefit that the bank cannot seize. The latter would in turn be a prerequisite for the unemployment benefit to serve as security for the loan. Since this is not the case, the unemployed must find a solvent guarantor or a co-applicant, who should ideally come from their own family or from their personal circle of friends. Those who own a large fortune or a property can also leave these things as security.
Loans for ALG II recipients
ALG II or Hartz IV recipients have practically only one way to get a loan for the unemployed. If there are urgent repairs or new purchases in the household that cannot be financed from the regular balancing power, you should contact your responsible service manager in the job center and apply for an interest-free and earmarked loan there. The same applies in the event that rental or energy debts exist. They can seriously endanger one’s personal existence and lead to the termination of the apartment or the interruption of the power and energy supply.
It does not have to go that far, however, if the Hartz IV recipient acts in good time and makes an application for the assumption of rent or energy debts or for an interest-free loan.
The repayment modalities are contractually regulated. This applies to both the amount of the installment and the length of the term. In many cases, it makes sense to offset the monthly repayment rates for the loan for the unemployed against the current ALG II benefit.