Obtaining a loan when you’re unemployed or rely solely on benefits is challenging however, not impossible. There’s a variety of lenders who’ll lend for you, but as you’re considered a medium to risky, you may expect higher rates with APRs starting at 39.9%.
Lenders are usually unwilling to provide loans to people who don’t have employment or firm income, but that doesn’t mean it’s impossible.
If you are unemployed, it can be difficult to borrow funds, be it financing, credit card or mortgage. Loans tie you down to a repayment plan which includes interest, which makes it important to involve some kind of income – it’s a major risk to try taking right out financing when you’re unemployed.
Lenders will be familiar with this and if they are willing to offer a loan, then it’ll feature a higher interest and stricter conditions than any standard package on the market.
However, if you do need a loan then it’s important to be aware of what’s potentially available on the market, the potential risks and how you can improve your likelihood of getting credit without an income.
Is it possible to get financing when you’re unemployed?
Yes, you can get financing when you’re unemployed, but it is more challenging and potentially a lot more expensive – and for that reason more risky.
When deciding to offer financing, lenders will always check your credit report. It really is one of the main tools to help lenders make a decision if to give you a loan.
That means before you obtain a loan or any other kind of credit – particularly if you are unemployed or don’t have a well balanced income – check your financial history online.
Your credit file will reveal:
Your credit score
Your bills and loan repayments, including any missed payments
Just how much credit you now have available
What credit applications you have recently made (in case you were approved or declined)
Each credit scoring agency will provide some more information, depending on what bundle you choose to pay for, such as what risk there is to you of becoming a sufferer of identity fraud.
You may get your credit file for free from most credit checking companies, usually as a two-week or 30-day trial.
Some companies will even offer you advice on how to boost your credit history, but there are a few very simple what to look out for:
Neglected payments – rectify them at the earliest opportunity
Not being registered on the electoral spin at the address – you can easily register to vote online which will improve your score
Almost every lender will reject the application if you are not registered to vote at your address. This might seem safe, but it’s an root risk factor for lenders. Often, people who have committed credit fraud have used a fake address – so formally registering your name to your address via the electoral roll, gives your credit history a boost.
However, this would be the minimum amount requirement for trying to get most loans. The minimum criteria section on the loan application page ought to be the first place you check when making use of (after you’ve viewed your credit file).
This will include information such as what your minimum income should be. All creditors require applicants with an income and sometimes the bare minimum requirement is really as low as £5,000 per time, but it won’t often be less than that.
Types of great benefit loan
There are a variety of different bad credit lenders who’ll consider customers that are unemployed or on benefits. I’ve provided an overview of each of these loan types below. We’ve decided not to feature logbook lending options or doorstep loans in the comparison table due to their extremely high cost. However, you will get out more about these types of high-cost loan be clicking on the relevant website link.
Most guarantor lenders offer lending options to those on benefits. If you’ve received someone who’s eager and in a position to back your loan application, a guarantor loan is actually a great option. We’ve included them in the contrast table below and have a full page dedicated specifically to guarantor lending options here.
If you have your own car which is under 10 years old, a logbook loan can be an option. Logbook lenders are lenders of final resort so be cautious when looking at this option – uncover what which means here. We haven’t included them in the comparability table below nevertheless, you will get out more information about logbook loans here.
Several lenders can provide you with a cash loan as high as £500 regardless of where your income comes from, delivered and accumulated on your doorstep. Doorstep lenders are lenders of final resort so be cautious when looking as of this option. We haven’t featured doorstep lenders upon this evaluation table nevertheless, you can find out more info about them here.
What not to do
Almost all lenders who accept customers who are unemployed or rely exclusively on benefits won’t rely on your promise to pay back what you’ve borrowed, and will instead require yet another form of security like a guarantor or an automobile (see logbook loans). Applying for financing on benefits includes a severe health alert – it is completely essential that before investing in financing you are positive you can securely meet the payments. Any doubt, USUALLY DO NOT apply as you will be adding those closest to you at risk.
If you’re unemployed as well as your only form of income is from benefits, it will likely be tricky to obtain a loan and you’ll need to reassess your alternatives before applying. A couple of lenders out there who’ll lend to you but they come with a warning.