If you receive benefits but need a loan, Norton Finance may be able to help. Read on to discover if you can get a loan while on benefits.
Benefits is an umbrella term for a wide range of government-backed policies that provide financial assistance. If you live in the UK and receive benefits, you may not know that you could be eligible for a loan. However, there are loans for benefit claimants in the UK – you just might have to look a little harder, alternatively search for loans through a broker. Norton Finance acts as a broker and can search multiple lenders on your behalf to find loan companies that accept your benefit terms. Read on to find out how to get a loan on benefits, how to apply, and how much you might be able to borrow.
Can I get a loan if I am on benefits?
The short answer to this is probably. The slightly longer answer is that it will depend on the lender, the types of benefits you receive, and your total income. Other factors that can affect your ability to apply for a loan on benefits could include:
- Whether or not you have a guarantor.
- How secure your future income is.
- Your financial record.
- Your credit score.
There are loan companies that accept benefits as income, provided you can demonstrate you can afford the repayments, but your options may be more limited than others.
There are a variety of unsecured loans for people on benefits that you could apply for. These include, but are not limited to:
- Pay weekly loans: These are designed to be more flexible for people in receipt of benefits. These types of loans offer smaller repayment instalments due weekly rather than monthly, which can make them easier to manage.
- Bad credit benefit loans: Certain lenders specialize in providing short-term loans for those on benefits who also have a poor credit history. Taking out this type of loan can help you to improve your credit score, provided you meet the repayment schedule.
- Universal credit loans: There are many lenders out there who offer loans tailored to work for people receiving Universal Credit. As this is a relatively reliable source of income, it may increase your chances of getting a loan or enable you to borrow a higher amount.
Which benefits count towards my income?
There are many different types of benefits that people in the UK can access. These range from disability support to income support and help with childcare costs.
There are multiple benefits that could count towards your income when applying for a loan, but there are also some that probably won’t. If you are on benefits and need a loan, you will find that lenders are rarely willing to accept:
- Job Seekers’ Allowance
- Housing Benefit
- Income Support
- Pension Credits
However, do not be disheartened – there are lenders out there who will consider other types of benefits as income when assessing your loan application. Types of benefits that loan companies may accept include:
- Universal Credit
- Disability Living Allowance / Personal Independence Payments
- Child Benefit
- Child Tax Credits
- Employment and Support Allowance
- Fostering Allowance
- Incapacity Benefit
- Industrial Injuries Disablement Benefit
Can you get a loan on Disability Living Allowance?
It is possible to access a loan when you are in receipt of Disability Living Allowance (DLA), or its replacement, Personal Independence Payments (PIP). Note that if you are currently in receipt of DLA, you may find that your claim will end, and you will have to apply for PIP instead. Other related benefits that could count towards income on a loan application include Carer’s Allowance and Employment & Support Allowance (ESA).
The law states that people on long-term disability benefits must not be discriminated against by lenders and should be treated equally to other customers. However, income is only one factor that lenders consider, so you may not always be successful in your loan application. A short-term loan for someone on disability benefits is more likely to be approved if these are long-term benefits.
Can I apply for a loan on universal credit?
Yes, there are even lenders out there who specialize in offering loans to people who are receiving Universal Credit. However, just as with loan companies who accept benefits for disability, your income is only one factor that will be considered. You will have to be able to prove you can afford to meet the repayments, and the lender will check your financial history and credit score.
How to apply
The process to apply for a loan on benefits is much the same as the process to apply for a loan under any other circumstances. The key difference is that it may be difficult to find loan companies that accept benefits. We will probably need more information from you, including what types of benefits you are receiving and whether these are permanent or temporary.
All regulated UK lenders are required by the Financial Conduct Authority (FCA) to check whether each borrower can afford repayments before offering a loan. This means that you will still need to undergo a credit check. However, lenders who offer loans to people on benefits are typically more interested in your current ability to meet the repayments, rather than your financial history.
How much can I borrow?
The amount of money you can borrow when on benefits will depend on a variety of factors. These can include:
- The type of loan
- The type / types of benefits you receive
- Whether your benefits are temporary or permanent
- Your credit score / credit history
- Whether you have a guarantor
- Your current outgoings
- Whether the loan is secured
With Norton Finance as your broker, the amount you can borrow is not dependent on a guarantor, and you do not need a perfect credit history. The amount you may be able to borrow depends on the type of loan you require. For example, Norton Finance may be able to source:
- Between £3,000 and £500,000 for a secured personal loan
You can also apply for a loan through Norton Finance if you have an existing County Court Judgement (CCJ) – you will just need to be able to demonstrate your ability to repay the new loan instalments alongside those for your CCJ.
The exact amount you can borrow will vary from case to case. While a poor credit score doesn’t mean you cannot access a loan, it will likely mean you won’t be able to access the best interest rates.
What loans can people on benefits get?
There are various types of loans that people on benefits can get. The most common include:
- Secured loans, such as homeowner loans
- Guarantor loans
Can I get a loan through PIP?
As a long-term, secure benefit, there are many lenders who are willing to accept PIP (or until recently, DLA) as a form of income when considering a loan application.
What loan terms are available?
Loan terms for people on benefits can range from as little as one month to as long as 60 months. The larger the amount being borrowed, the longer the potential repayment terms will be.
Do I need a guarantor to get a loan on benefits?
Some lenders will offer loans to people on benefits without a guarantor, provided you can prove your ability to meet the repayments. However, having a guarantor may make it more likely that your loan application will be accepted.
Contact Norton Finance today to find out how to apply for a loan on benefits.