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For people who are receiving government benefits, taking out a loan can be a real struggle. However, there are specialist lenders out there who may be able to attend to their financing needs. Whilst it is common for most lenders to be reluctant in granting a loan for people who are relying on benefits, there are also those who can consider assisting such high-risk borrowers. 

Benefits and your credit score

If you are getting government benefits, know that they are not going to be reflected on your credit record. They shouldn’t have any impact on your credit score. However, the fact that you are getting benefits in itself is indication enough that your finances may not be in the best state.  

However, lenders are going to check how much income you’re earning and will find out that you are getting benefits. This might make them a bit reluctant to grant you any loan. Your income may not be deemed by traditional lenders as enough to pay off what you’re aiming to borrow. 

Specialist lenders

If a bad credit and being on benefit is preventing you access from regular loans, you can refer to specialist lenders instead who may be able to assist you in getting the loan you need. With terms that can range from one to five years, you can take out a guarantor loan. Lenders will usually allow you to borrow between £500 and £10,000.

Having a guarantor that will stand by you would make the loan less risky for the lenders. This is because there will be a guarantor who can be expected to take on the loan repayment if you will not be able to fulfil the responsibility yourself. You may apply for a secured loan as well. Lenders will be willing to let you borrow money when you can present collateral. This is risky on your part though because if you take out an amount that is way beyond what you can afford to pay back, you might just end up losing whatever asset you’re presenting to secure the loan. 

Much like those who aren’t on benefits, people on welfare also experience unforeseen circumstances and may need emergency cash. If you are currently on benefits, you may wonder if you’re still eligible for a loan. The good new is yes but not all lenders accept welfare income.

What are the Loan Options Available to Me?

Since not all financial institutions accept those on benefits, the key is to find those that will accept your certain income level as well as credit score.

  1. Payday Loan

I recommend this type of loan for those that do not need a huge sum of money. This loan generally requires you to pay it upon receiving your next paycheck. If you search deeper, you can even find institutions that will accept your benefits as a source of your income. However, they are notorious for having high-interest rates.

  1. Bank Loans

If you’ve had a stellar payment record in your current bank, chances are they’ll offer you loan options that are apt for your income level.

  1. Budgeting Loans

Check if you can apply for a budgeting loan. If you’re getting Income Support, then there’s a fat chance you may be eligible for this. You can pay this type of loan with the future payments from benefits that you will get. They are also free from interest fees.

When looking for loan options, always be wary of those options with high-interest rates. This is especially true for some online loan options that you will see on the internet. Those rates ca go as high as 4000% and will put you in a more dire situation. Check if you can repay the sum of money within the given time frame. Loans such as title loans or even the payday loans are also reputable for having high-interest rates. Always consider before signing the terms.

Payment Method?

Once funds are available, we send it directly to your checking account that is registered during your application. You should be able to receive the funds in a just a few minutes to an hour. No need for complicated documents or extra requirements. We’ll send it right away.