Loans for People on Benefits – An Introductory Guide
The popularity of loans only grows as time passes by. This is not surprising at all given that the debt problem is experienced all over the world, not just in the UK. As more people are facing financial adversities, the services offered by lenders become more valuable. As such, there is also a growing number of lenders who offer loans to those in need, particularly with those who are struggling to make ends meet and those who are unable to qualify using traditional loan methods. Among these types of loans are loans for people on benefits.
There are a variety of loan types available for people based on their status and capacity to pay. The lending industry has evolved greatly over many years that lenders are starting to understand that there are some borrowers who find it difficult to qualify using standard eligibility requirements. People on benefits are one of them. The ability to show proof of income and capacity to pay is something that most lenders give a lot of weight to when considering applications. If you get your income solely from benefits, this could limit your options and the ability to get approved for a loan. When you have urgent financial responsibilities, you have to think about how you can get financial assistance.
If you are receiving benefits, getting a loan can help supplement any financial needs during emergency situations. If you have those moments wherein you are in need of extra funding for your medical bills, emergency home repairs, and other unexpected costs, the money from the loan will be of help.
If you need a loan and you have this unique circumstance, banks are never an option. Banks are tied to traditional lending policies and they are rarely flexible about their policies. Meanwhile, private lending companies deliver more flexibility with their products and services. As such, they can offer loans to suit every individual. While living on benefits and you need extra cash, you can turn to online lenders instead of banks and you would have a better chance at getting your loan.
In the UK, lenders can be easily accessed online (in fact, most of them operate online nowadays). This can make the search and application process easier and more streamlined. This is also how these lenders are able to release the funds in as little as a few hours to a day, which is ideal for emergency situations. And the best part is that most of these lenders can offer loans to people receiving benefits without the need for a guarantor. And yet, everything can be done in the comfort of your own home.
Are you worried about not qualifying for loans for people on benefits? At Money Pig, we are committed to helping people who have difficulty borrowing money, especially using traditional methods. Whether you are unemployed or rely on benefits for your income, we can help you find the ideal lender that is willing to give you a loan based on your personal circumstances.
Check out the list of questions below to be guided about how loans for people on benefits work. You can find detailed information on what you need to know to qualify and to find the right lenders.
FAQs on Loans for People on Benefits
- How do loans for people on benefits work?
- What are considered benefits income?
- What are the qualifications for benefits loan?
- Why do you need this loan?
- What types of benefits won’t be considered as income by lenders?
- How can people on benefits use cash loans?
- Can you borrow money even when on benefits?
- How soon can you process the loan?
- Do you need a guarantor for a benefits loan?
- Can you get a payday loan on benefits?
- Can you qualify for a loan on disability benefits?
- Can you get benefits loan with bad credit?
- How much can you safely borrow?
- How to compare loans for people on disability?
- What loan alternatives are available for people with disability?
- Can a lender reject your application based on disability?
- Can Money Pig help with people on benefits?
Loans for people on benefits are one of the specialized types of loans available from various lenders in the UK. This is a type of loan that is offered to those who rely on benefits as their main source of income. There are various types of benefits that are available and it is up to the lender’s discretion to determine what type of benefits would be considered as a valid source of income.
For those who are qualified to take out benefits loans, the amount of money you can borrow will range from £100 to £1,000. This loan must be repaid from 6 months to 18 months, depending on the loan agreement. The payments for the loan can be made weekly, bi-weekly, or monthly. The goal is to make repayments easier and more manageable for people who are on benefits.
This type of loan is suitable for people on benefits who would like to ease their credit situation. It provides you the opportunity to get instant access to cash when you need it, especially during times of emergency.
There are many types of benefits and they are not classified as the same. Every lender will evaluate each benefit to determine if they can be considered a valid source of income. To give you an idea of what is mostly considered as valid income, they are disability living allowance, severe disablement benefit, family allowance, pension, incapacity benefit, industrial injuries/disablement benefit, tax credits, and more.
There are a few factors that lenders evaluate to determine if you are qualified for a benefits loan. The first and most important qualification requirement is that you must be receiving benefits for at least 26 weeks by the time that you apply for a loan (the specifics of this will vary from one lender to another, but just to give you a general idea). There are also different types of benefits but it is up to the lender's discretion to determine which ones would qualify as a benefit. A few common examples include disability benefits, support, pension credit, support allowance, housing allowance, and more.
Another big factor that lenders evaluate upon submission of application for benefits loan is your ability to repay the loan. The type of benefit and how much benefit you receive per month can impact the type of loan you qualify for and how much you can borrow. The credit history of the applicant is also something that lenders look into. Its specific impact into your application will be determined solely by the lender. But if you have poor credit, you can expect it will be more challenging to qualify for a loan. If you can eventually find a lender that will be willing to give you a loan, this will most likely come with a high interest rate.
The challenge of applying for benefits loan is the same for those with poor credit as anyone who is unemployed. This will be a Herculean task to find reasonable terms or to get approved at all. If you have other sources of income outside of your benefits, make sure to indicate that in your application as it can help boost your chances of being approved.
The fact that you are getting benefits is a good thing because you have a source of income even while unemployed (or unable to work). But in most cases, the benefits you get are limited and are unable to satisfy all of your basic necessities. There are emergency situations and unforeseen events that will require a certain amount that your benefits simply won't be able to cover. When this happens, loans for people on benefits can be very helpful because you will have the resources you need to cover the emergency expenses.
Aside from emergency purposes, you can also use the loan towards other living expenses such as payment for your rent, food expenses, unpaid bills, or medical bills, among others. Essentially, it is any kind of expense that is beyond your usual living cost that you have no extra funds for. A loan can provide the financial relief you need so you can survive until you receive your next set of benefits.
Lenders do not normally require you to provide a purpose for the application when you want to get a loan. But it is important to have a clear idea of what your intended use of the money is for. This will ensure that you won't just go into debt for nothing. The loan that you take out must have its purpose. Otherwise, you can just make do with what you receive from your monthly benefits.
There are many other types of benefits that may or may not be honored as a valid income. It will depend if these benefits will be considered by the lender who is going to evaluate the application. The said benefits are as follows: income support, child support payments, housing benefit, and job seeker’s allowance.
Again, the criteria are based solely on the requirements set by each lender. Some of the lenders in the UK might accept the above listed as valid sources of income. It is up to the lender to make the decision.
The purpose of the loan for people on benefits will depend on their personal discretion. The purpose of the cash obtained from this type of loan is not something that lenders are interested to know upon the time of application. The borrower can, therefore, use the cash for whatever purpose they seem fit.
Yes. Loans for people on benefits are made specifically for individuals who are interested to borrow but are limited by traditional loan options. Since these people do not generate income using traditional means, they rely on benefits as proof of income when submitting their application for evaluation. The only downside when you borrow money with benefits loan is that the amount you can borrow is limited too (to make monthly payments easier to manage). Most lenders would only approve a maximum of £1,000 but it can go higher (or lower) depending on the lender you are working with.
When you apply for a loan, the lender is legally required to conduct a credit check on your account. The information derived from your credit check will be used to determine if you are approved or not. The reason why many borrowers might think twice before borrowing money when on benefits is due to the limitations of their paying capacity. When you are unable to display your ability to meet repayments, it can hurt your ability to qualify for this type of loan. Each lender will have their set of minimum requirements for income and this threshold will increase if you apply for a significant loan amount.
The type of benefits you receive will also determine the type of loan you qualify for. Permanent or long-term benefits will have a higher likelihood of being honored as a valid source of income. But if you receive temporary or short-term benefits, this will affect your chances too.
If you are on benefits and are in need of immediate cash, you can get a loan approved fast. There are many lenders in the UK who specialize on this type of loan. If you can find the right one, you can get instant approval on your loan application. Once approved, you can typically get your money within hours or on the same day. If you have a valid bank account, the lender will deposit the amount you requested for directly to your account.
Not all loans for people on benefits will require a guarantor, but there are some lenders who might require them. It varies on a case-to-case basis. A guarantor is typically required by lenders if you are on benefits and have poor credit score, too. The use of a guarantor will provide more security to the loan such that it becomes less risky because the guarantor will co-sign the loan with you.
In the event that you fail to meet your monthly payments, they will be responsible to handle the payments on your behalf. As such, your guarantor must be of good credit standing, too.
Yes. Individuals who earn their income through benefits can qualify for a payday loan. In fact, this is one of the types of loans available that is not as stringent when it comes to the financial eligibility requirements. The only downside when you obtain a payday loan if you have benefits is that you would have to pay a high interest rate. Unless you are sure that you can repay the amount in a short period of time, it is best to look for other types of loans.
Yes. Many people who have suffered from a disability and are unable to secure employment receive monthly benefits from the social security administration. For most people, this is their main source of income. As such, you can use your benefits as a proof of income when you apply for a loan and you will be able to qualify (as long as you work with a specialist lender that offers loans for people on benefits).
Yes. There are many lenders in the UK and online that can provide benefits loans even on individuals with bad credit. They are willing to assist those with poor credit histories to find the ideal product for them. This is a good option for those in need of immediate cash but won't qualify for traditional credit institutions such as banks.
It varies from one lender to another and how they assess your eligibility requirements. The amount you can borrow will also be based on the benefits income that you have provided upon application, along with the monthly expenses that you currently shoulder. The lender will evaluate the information provided and assess how much you can manage with the monthly payments and be able to decide accordingly the amount you can safely borrow. Each lender has their unique algorithm as to computing this but the goal is to ensure that you won't get overwhelmed with the repayment of the loan.
As a result, it is important that you are 100% truthful in providing information about your financial capacity when you submit your application. This will ensure that you won't suffer from severe financial difficulties when you borrow more than you can afford to repay.
Comparing various lenders is an essential step so you can get the best rates and terms on your benefits loan. A common mistake that borrowers make is to assume that their options are limited so they rarely do extra steps to find better deals. But in order to avoid being trapped in an endless cycle of debt, you need to look at the criteria for each lender. Find a lender who is flexible enough to work with people receiving benefits and even those with a not-so-good credit. Make sure they have no hidden charges or rates.
If you can use a loan broker, that would be to your advantage. A loan broker knows the industry inside and out. Brokers are also connected with multiple lenders, including specialist lenders. They can link you to the best lenders in the UK that can provide the type of loan you need at the best rates. As a bonus, employing the services of a broker will save you time in the process.
If you are receiving benefits due to a disability, you can qualify for this type of loan. But if you cannot find a rate that would be a fit for your financial circumstances, you can look to other alternatives. Among your options are payday loans, which are less stringent and will provide you the amount you need in a short amount of time. Other options of loans include social security disability loans, personal loans, and home equity loans. Again, these types of loans vary in their rates and terms so you have to read through the fine print to make sure that you are getting the best rates for your needs.
When all else fails, you can even turn to grants and financial aids to get the financing you need. The best part about these last two options is that there is no need to repay them.
No. This is a form of discrimination. A lender can evaluate your personal and financial information and compare that against the prevailing criteria for obtaining loans for people on benefits. But the fact that the applicant is disabled should not be used solely as a determiner if one is approved for a loan or not.
Yes. As one of the top loan brokers in the UK, we can help individuals who receive income through benefits to obtain the loan they need. We are partnered with multiple lenders in the UK, which includes specialist lenders who can provide loans for those with bad credit, unemployed, or living off benefits.
We will compile your information and use that to evaluate which lenders would best match your qualifications based on their eligibility criteria. Thus, you can save time in searching and comparing through various lenders. You can choose which lenders to submit your application to so you can get faster approval, too. Our process helps streamline your loan application so you can get your loan when you need it.