How People on Benefits Can Get a Loan

When you receive benefits to supplement your income, it can be hard to find a loan when you need one. Often, financial institutions are hesitant to provide funds to someone who gets a significant portion of the money from benefits payments, and it may feel like you don’t have many options.

However, people on benefits can get loans; you just have to do a little work to find the right option. To help you explore your choices more quickly, here are some places to start your search.

Start with Your Primary Bank
A traditional bank or credit union typically offers better interest rates than specialty lenders focused on individuals with lower incomes. If you have been a customer with your primary bank for some time, and have shown yourself to be a responsible borrower in the past, they may be more open to providing you a loan than other traditional financial institutions. Since they have more access to records regarding how you manage your finances, they might be willing to work with you so that you can secure the funds you need.

 
However, it is important to note that many banks and credit unions have minimum requirements for their financial products. If that is the case, they might not be able to make an exception regardless of your prior relationship. Speak with them regarding any requirements to see if an option exists for which you may qualify, then consider whether you should put in an application.

Secured Loans
Another option that may be available through traditional lenders, including your primary bank, is a secured loan. These loans require you to pledge property, such as home equity or a vehicle, in exchange for providing you with the funds. Often, these loans carry a lower interest rate than non-secured loans, as the property offered as collateral lowers the risk to the lender. However, it is important to know that if you don’t meet your repayment obligations, the property promised in the lending agreement can be seized by the lender.

Loans for People on Benefits
Certain financial institutions specialise in offering loans to people who might not otherwise qualify. Often, these lenders have less stringent requirements for qualifying for a loan, but they also tend to charge higher interest rates to compensate for the increased risk.

Before applying for a loan of this nature, make sure to research their interest rates and repayment terms in advance. In some cases, the repayment requirements of the loan make the option fairly cost prohibitive, and it is never wise to put yourself at greater financial risk if it isn’t absolutely necessary.

 
The Bottom Line
Loan options for people on benefits do exist, though you might not have access to the full range of lenders a person with traditional employment can access. Before you being submitting applications, speak with a few lenders to see what options may be available based on their minimum qualifications for their loan products. That way, you can compare your options in advance, and choose a lender that is the most likely to provide you the funds you need at a rate you can afford.