Granting a Loan to an Unemployed Person

Not a day goes by in our various business offices where we do not receive a credit request from an unemployed person. Indeed, people who are unemployed also face the need to make major purchases, and the unemployed person, more than anyone else, sees their contributory capacity extremely limited. They, more than any other taxpayer, will therefore have difficulties paying upfront for the price of a washing machine, a car, or a computer: in short, to meet their basic needs in order to find a job. Is it legally possible to grant a loan or credit to an unemployed person?
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A harsh reality…

When your unemployment benefit is around €1,400 and you have paid your rent, the balance with which an unemployed person must meet their needs becomes very limited very quickly. Therefore, buying a basic necessity such as a car, a washing machine, a coffee table, or a refrigerator can prove to be a real challenge… Yet, finding a job requires presenting oneself properly dressed and groomed at selection interviews, browsing job offers, and sending application letters and a CV, tasks for which the use of a computer and a printer is essential.

Can a loan be granted to an unemployed person?

What will determine a financial institution’s willingness to grant a loan will be, in addition to the contributory capacity, the possibility of seizing assets in case of non-payment of monthly premiums. Belgian and Luxembourg legislators have decided to make unemployment benefits below a certain amount unseizable (except for the recovery of alimony arrears). The unemployed person is therefore somewhat assured of retaining their unemployment benefit.

This gift from the legislator, which relieves the unemployed person of responsibility, acts like a sword of Damocles hanging over the shoulders of the unemployed person. Indeed, as we have explained, if the unemployed person is protected from recovery on their unemployment benefits, their ability to borrow is, by necessity, extremely reduced.

Thus, very often, the unemployed person will face a refusal for their loan or credit request since the financial institution will not be able to seize their unemployment benefits at the source in case of non-payment of monthly premiums.

Is there an alternative to allow the unemployed to access credit?

Regarding the installment loan

The unemployed person will necessarily need to obtain an endorsement, a guarantee, or a guarantor if they want to obtain a credit or a loan. In other words, the unemployed person cannot borrow alone. They will need to find a cosigner, a co-borrower, that is, a person who borrows with them and who must be perfectly solvent.

Regarding the mortgage loan

The unemployed person who owns a house or real estate (land, building, etc.) can take out a mortgage loan but on the condition of taking a mortgage on the real estate.

This still means that the loan amount cannot be less than €25,000 because the costs of establishing a mortgage are so high that it would not be reasonable to take out a mortgage loan for a lesser amount.

Are you looking for a job?

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