Loans Options for People Receiving Benefits, finding a loan can be challenging, especially for those who are receiving benefits. Despite earning a regular income from the government, it is often less than what employed individuals receive, making the loan application process more complicated. In this article, we aim to provide a comprehensive guide to help people on benefits understand their loan options.
Can You Get a Loan If You’re on Benefits?
The answer is yes! People who receive benefits may still be eligible for a loan, depending on various personal circumstances. Some lenders are willing to consider certain benefits as a form of regular income, making it possible for individuals receiving benefits to secure a loan. The type of benefits you receive may impact the loan options available to you, and we will discuss this in more detail later.
Which Benefits Count as Income?
Lenders may consider the following benefits as eligible sources of income:
- Personal Independence Payment
- Incapacity Benefit
- Child Tax Credit
- Child Benefit
- Working Tax Credit (or Universal Credit)
- Fostering Allowance
- Employment and Support Allowance (previously Severe Disablement Allowance or Incapacity Benefit)
- Industrial Injuries Disablement Benefit
- Disability Living Allowance (or Personal Independence Payment)
Benefits that are typically excluded from consideration as income include:
- Housing Benefit
- Income Support
- Job Seekers’ Allowance
- Pension Credits
It is important to note that the exclusion of these benefits does not automatically disqualify you from getting approved for a loan. However, it may make the process more difficult if you do not receive another form of qualifying income.
Loans Options for Disability Living Allowance and Universal Credit Recipients
People who receive Disability Living Allowance (DLA) may be eligible for loans, as the benefit is viewed as a regular form of income. DLA is being replaced by Personal Independence Payment (PIP) for individuals over the age of 16, and those who receive PIP may also be eligible for loans.
For those who receive Universal Credit, the loan application process is the same as for other individuals. However, it is worth noting that loan options may be more limited for individuals receiving benefits compared to those who have a higher level of income from employment.
Applying for a Loans on Benefits
The process of applying for a loan is not much different for individuals who receive benefits compared to those who receive income from employment. You may need to provide additional details about the type of benefits you receive, along with your monthly income and expenditure.
At Little Loans, we are a reputable credit broker authorized and regulated by the Financial Conduct Authority (FCA). We work with a panel of lenders who consider applicants from a wide range of backgrounds, including individuals receiving benefits. Our free-to-use loan eligibility checker provides instant results without the need for a credit check. If you choose to continue with the application, we will perform a soft search of your credit file to identify the lender most likely to grant you a loan. If approved, the loan amount may be paid into your account in just minutes.
Loans Repayment Terms
The repayment terms for a loan will depend on the amount borrowed. Little Loans offers loan repayment terms ranging from 3 months to 60 months for larger sums. The detailed breakdown is as follows:
- 3 to 12 months for sums between £100 and £1000
- 12 to 36 months for sums between £1000 and £2500
- 12 to 60 months for sums between £2500 and £7500
- 18 to 60 months for sums over £7500 up to the maximum amount of £10,000
In conclusion, loans for people on benefits are a feasible option for those who are in need of financial assistance. While the amount and type of loan you can receive may depend on the benefits you receive, there are lenders who are willing to consider benefits as a form of regular income. To apply for a loan, the process is similar to that of a regular loan applicant, but you may need to provide additional information regarding your benefits and monthly income. With the help of a reputable credit broker, you can quickly and easily find the best loan option for your needs, without the stress and hassle of applying through multiple lenders. Whether you’re looking for a loan of £100 or £10,000, with repayment terms ranging from 3 to 60 months, there are options available for you. Be sure to research your options and make informed decisions to ensure that you are choosing the loan that is right for you.
