Can You Get a Loan When You’re on Benefits?

Getting a loan can be difficult when you are unemployed but it seems to be frustrating when you are on benefits. There is no doubt that direct lenders cannot risk investing money on you if you are out of work. However, some lenders fortunately do not hesitate to consider you a reliable applicant even if you are on benefits.

Unemployment is a serious concern and affecting a large number of people. It is crucial that people avail benefits so that they can rely on them for their day-to-day expenses. During unemployment, you can take jobseeker allowance, income support, housing benefits, and the like. Getting approval from direct lenders for Loans for unemployed people on benefits is quite complicated, as you do not have any part-time job or any asset for generating income.

Lenders are always concerned about your repaying capacity. They will look out for your regular income to determine that whether you are able to recoup the loan. If it is believed that you will struggle to meet your installments, your application will be turned down. However, the situation is not same throughout the loan market. Some lenders can provide you with the reasonable amount of loan on the basis of your monetary benefits.

If you are not certain about our repaying capacity, you should consider alternatives as follows:

Guarantor loans

As the name suggests, a guarantor will enter into a contract and will be obliged to pay off the debt in case of breach of contract. A lender will be comfortable to finance your needs as long as there is a guarantor.

Secured loans

If you are brave enough and certain that you will be able to recoup the debt, you can put up one of your assets as collateral. Lenders will immediately sanction your loan as they can recover their funds by selling collateral in case of defaults. If you need a small amount of money, lenders will not be stubborn to fund your needs, but if you need a big amount, they will ask for a guarantor or collateral. In the end, you have to pay back your loan, so make sure that you will be able to repay the loan without hurdles. Or else, it will cost your collateral. Therefore, it is recommended that you assess how much amount you need before applying for the loan.

Credit builder credit cards

Unemployed loans to people on benefits are provided if you have a good credit history. Otherwise, your lender will ask for a guarantor with a perfect credit record. What will happen if your credit history is poor and no one is ready to act as a guarantor? With credit builder credit cards, you can have your needs financed quickly. However, you will pay a high interest rate and credit limit will be lower than a standard credit card. Despite these restrictions, it is a good choice for bad credit borrowers. Further, you can increase your credit score by paying all dues on time.

Cash loans

Direct lenders can easily approve short-term cash loans even if you have a less-than-fair credit history. Having a part-time job or any other sources of income can be benign for you. This stimulates quick disbursal. These loans carry a high rate of interests so apply for only the amount that you need.

Take message home

Undoubtedly, unemployment brings financial instability and stress, but you can mitigate it by taking loans for unemployed people on benefits. Do not lose hope if a lender rejects your application. Instead, you should contact another loan company that is ready to provide funds even if you are on benefits.