#loans for people on benefits
If you live in the UK and are currently receiving benefits, you may find that the monthly allotment is not always enough to help cover all of your expenses. The good news is that the UK government and social organisations throughout the country offer additional services to help cover some additional costs. These additional options can help you spread your benefits out and make it easier to get through the month. Some benefits offered are grants or gifts and do not need to be paid back. Others are loans, but allow you to pay back a little at a time with typically lower interest rates.
Be wary of high risk loans
Many people who are on a low income feel that payday or short-term loans are the only options available to them when it comes to borrowing. Depending on your circumstances there are many other financial options available including grants, benefits and non-profit low interest loans. Whilst short-term loans to have their place, they generally come with a high cost to obtain a small some of money. With any loan you consider taking out, make sure you completely understand the terms and the costs associated with them.
* Popular Loan types – See loan and benefit options for specific circumstances here .
Below is a look at some of the main low income loans and benefits offered in the UK
My Home Finance – These types of loans are operated through the National Housing Federation, and have been providing loans to families on benefits since 2010. These loans can be used for any purpose and typically go as high as £500. You will be required to make weekly repayments that are based on the amount of money borrowed, the time frame for which you are paying the loan back in, and your specific interest rates. The interests for these loans can run as high as 29.9%, but is still substantially lower than many of the payday loans available. You are required to have a bank account or they will help you set one up through the Royal Bank of Scotland.
Budgeting Loans – If you have been receiving benefits for at least 26 weeks, you may be eligible for a budgeting loan. This is a no-interest loan that can be repaid over the course of 104 weeks. You must borrow at least £100, and cannot owe the Social Fund more than £1,500. The loan must be used to cover essentials, such as rent, furniture, and clothing, work related expense, or maternity needs.
Local Council Support Schemes – This scheme provided through your local authority is responsible in helping locals experiencing everyday living emergencies such as; individual or family health issues, ability to provide food, avoiding eviction and other serious living matters.
Government Grants – There are numerous government grants to assist with everyday living costs and emergencies. In addition to the above assistance and loan options for people on benefits, here is a list of important government grants – Job Seeker’s Allowance, Utility assistance for electricity, water and phone, Family grants, Tax credits and more. Visit Turn2us for a detailed list of grants.
The above are just some of the more popular financial assistance or loan options for people on benefits. These are genuine services which have been created to help lower income earners and those on welfare.
Important considerations before applying for a loan
Do you really need the loan: Taking out a loan to pay off bills can be a very dangerous proposition. Likewise, taking out a loan to purchase a depreciating item can land you in a lot of debt. If you are thinking of taking out a loan for either situation, you may want to rethink your plan. This type of borrowing is a fast track to bad debt and potential financial issues.
Can you afford the loan: Just because a lender is willing to offer you money, doesn’t mean you can afford it. Prior to any type of borrowing you must carefully review your finances and make sure you can afford the cost of borrowing along with making the repayments.
Are there other ways to obtain money: No body likes going into debt and taking out a loan is doing just that. Explore other money options first.
It is important to be very mindful of who you are getting help from when looking for financial assistance. Always make informed decisions and stay away from lenders that pressure you into doing business with them. Lastly, avoid making quick decisions on serious matters especially if you are under duress or enormous pressure, you may end up putting yourself in a worst off position.