What If The Benefits Do Not Suffice The Loan Amount You Need?

August 11, 2023

Unemployment is the hardest phase to undergo for anyone. Managing regular expenses and emergencies get difficult.

The government of the country provides benefits for the jobless. Under this, one receives pay until getting a suitable regular job opportunity. Thus, individuals rely on these benefits to cover their survival needs.

Sometimes, the amount falls short of life goals. It can be due to any reason like- a medical emergency, short-circuit, or natural calamity. In any of these situations, you need more money than just benefits income. Consequently, individuals seek loans on benefits income. Some lenders deal with unemployed individuals with just benefits income.

However, the catch is- you only get up to £1500 on benefits income. Lenders consider income from benefits as subordinate and not prime income. Hold a relevant part-time income for a higher amount (like £3000).

If you need more, the blog may help.

Is getting a higher sum on just benefits pay practically possible?

Getting a loan with a higher amount is impossible with just benefits income. You will have to work towards improving your loan affordability.

To qualify for any loan, you must prove affordability. It implies – your present income should be sufficient to meet the loan repayments and lifestyle expenses. Opposed to this, the lender denies the loan approval if it impacts the general well-being.

You may need a loan on benefits for emergencies like the one mentioned above. But to get a higher sum, you must take the below actions before applying.

1)      Check savings

You may not save much by living hands to mouth. A hike in energy consumption prices leaves one with zero savings. However, if you have some, you can bridge the need with that. If you still need some amount, the loans may help. It is because the lender shares low risk there. He may agree to finance the small amount.

2)      Explore Guarantor possibilities

If someone known agrees to guarantee the loan, you can get a higher amount. He is generally a family member having sorted finances and credit score.  Lenders analyse the profiles of both the persons on the loan.  If he meets the eligibility criteria, you may get more amount.

However, ensure that guarantor knows everything about the agreement. If he walks off the agreement, the loan may enter default. The worst part is- It may impact the credit scores of both entities involved.

Here, unemployed individuals suffer the greatest credit drop. Poor credit scores lead to immediate application rejection. A recent default may attract a clear no from affordable lenders.

Following this fear, many individuals ask:

Okay, is there any way to get cash without a guarantor?

Yes, there is. Check loans for the unemployed with bad credit and no guarantor facility. In this, you may qualify for a loan as an unemployed independently. It is for those who do not want to involve any other person in the loan. You may get the loan immediately after approval with a flexible payment schedule personalised to your affordability.

Sounds relieving?

Here’s the catch!

To qualify, you must hold any income proof apart from benefits. It should be an authentic one. Moreover, you should have stable finances in the past 6 months. High delinquencies may limit your chances.

3)      Provide additional income evidence

As mentioned above, qualifying at benefits alone is possible but only for a small loan amount. To ensure a flexible catch, you must provide income proof.

In unemployment, one often forgets about the active ways he receives earnings. For example, you can provide the below incomes as legal income proof:

  • Income from room rentals
  • Income from freelancing
  • Scholarships that you receive
  • Government grants that you leverage
  • Income from tuitions
  • Self-assessment tax return
  • Official letter from the employer (recent)
  • Income from overseas

If you have additional income sources like these, provide the proof. However, it should be an active and updated one. Providing an obsolete one may lead to application rejection.

4)  Check out Budgeting Advance

Loans for the unemployed are generally suitable for short-term needs. If you need much flexibility, Budgeting Advance may help. It is for those individuals who receive Jobseeker’s Allowance or Universal Credit. It is valid in Wales, Northern Ireland, Scotland and England. The amount you get depends on your savings, benefits and the ability to pay the loan back.

Additionally, you can claim budgeting advance if your past 6 months’ earnings did not exceed £2600 (single)and £3600 (couple). The minimum one can get is £100 for needs.

What can I use the budgeting advance for?

You can use the loan to meet your regular needs like-

  • food
  • health
  • travelling expenses
  • child costs
  • Funeral expenses
  • Moving costs
  • Rent
  • Home Improvement
  • Repaying personal loans

 However, you may not get one if you get a job. It is strictly applicable to those receiving benefits.

What if I am yet to receive the benefits payments? How do to cover urgent needs?

If you need to finance short-term needs like- below up to £1000, text loans for unemployed people can help. Unlike strict guidelines like budgeting loans, you may get these anywhere with a normal mobile model. You do not even need a smartphone. It is because these are text-based loans that you get immediately. Moreover, you can pay the loan back in easy instalments.

It is more affordable than budgeting loans. In the latter, you must repay the loan from benefits income. Although the loan does not entail any interest, the other penalties make it costlier. You have to pay it back after 12 months of taking it.

5)      Check secured loan options

It is one of the easiest ways to get a higher amount at low income. Secured loans help you qualify for any amount up to £50000 for your needs. Furthermore, pledge an asset equal to the amount you need. You can put up any belongings like- a car, property, garage space, jewellery, etc., to get the loan.  By doing so, you may get a higher amount at far low-interest rates.

It is a great option to get instant cash without depending on someone(guarantor) to get the loan. However, seeking such an option in unemployment is not advisable. You may lose assets if you cannot pay the loan in the required term. It may prove risky in an unstable financial phase.

Alternatively, if you have an offer letter and joining soon, you can go for it. Analyse the repayments to cover and budget for it accordingly.

Bottom line

These are practical ways to get a higher sum as a loan if unemployed. It is advisable to wait if the purpose is not urgent. Check whether you can finance the needs from savings. If not, explore low-risk options with financial flexibility like- text loans or unemployed loans for short-term needs.

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