Why do I need loans when I am on benefits in the UK?
A benefit recipient is someone who is not earning money from direct employment. Maybe, you are out of a job for the time being or you have some disability restricting you from earning money. Since you are cut from the stable source of earnings, you get compensated with benefits.
This is like financial support that you will receive from the Government. The concept is to assist you in coping with the regular expenses. Although you can manage some portion of the usual needs with benefits, they might not be sufficient.
With time, your expenses will grow and you will need additional money. Besides, if you have taken a break from your current job, you will need financial support for various reasons. You like to support your time and significance in preparing for the upcoming job interview.
However, you will not get relief from usual necessities. At times, you might need a surplus amount of money to spend on a payout. You are living on limited money.
For this reason, taking out money from the monthly budget will be impossible. Now, if the necessity is urgent and unavoidable, you must think of alternate ways to arrange money. In these circumstances, you can use it for a personal loan while living on benefits.
This financial support will be treated as one of your sources of income. Based on that, you can qualify for loans if you are able to fulfil the other eligibility criteria. Before you proceed to get loans, convince yourself that you have a real reason in place.
Your financial troubles will increase if you take out loans casually without verifying the actual need.
Reasons why getting a loan besides benefits is meaningful
There should be some concrete necessity to get a loan when you are living on benefits. In your situation, it is clear that you lack the resources to manage your life. However, despite this, if you are managing expenses without borrowing, there might be some reasons.
Either you are keeping payment unattended or you are living on vital needs. You are squeezing the expenditure budget as much as possible. To prevent yourself from borrowing money now and then, you must work on ways to increase your income.
Then, external cash infusion will not be needed. You can even continue with some splurging. Despite this, some situations might surprise you.
Covering unplanned payouts
Suppose you need to visit the doctor all of a sudden. Now, you might not have prepared the budget of this month for this payout. Since all of the money you have has been occupied, you have to seek external financial assistance.
This is a crisis, and you cannot wait till you arrange funds on your own. These are unexpected outgoings that happen out of the blue. Most importantly, you cannot overlook them.
You have to start an immediate treatment. Thus, situations like this when you cannot compromise with your health need you to depend on loans.
Need funds without a bank account
You do not have a bank account where you can obtain your part-time income. Meanwhile, when you are completing the formalities to open a new one, a sudden cash crunch might pop up. You must attend to it, or else late charges will be imposed.
Since you do not have a bank account, getting a usual loan is also impossible. However, you can get a doorstep loan while living on benefits despite all odds. These loans do not need a bank account.
On approval, you can receive the loan amount at your doorstep. Thus, oftentimes, during the time gap when you might be preparing to open a bank account, you might face a cash emergency. With loans, you can even think of overcoming these types of cash challenges because of the lending diversity accessible to you.
Credit building or improvement
If you have to get started with credit record creation journey, you can seek assistance of a loan. No need to do a job and pay bills as loan repayment covered on time will make this possible for you. This means that you can begin the credit building process even when you are living on benefits.
The same thing applies if you are looking for ways to enhance your credit history. When you are benefits recipient, your financial struggles are natural. Entering a phase when your credit scores might degrade is most likely.
However, you can upgrade your credit history with the help of a loan. Refund the loan payment within the stipulated duration. This will keep reflecting on your credit reports to finally result in credit improvement.
Debt consolidation
It is not surprising if you are dealing with multiple debt problems in these circumstances. The incoming cash is smaller than the money you need to spend. This disparity will result in non-payments and accumulation of various forms of debt.
With the help of loans, you can settle these debts at one go. It will take a lot of time if you try to manage them individually on your own. On the other hand, loans can speed up the process and you can get rid of the debt pile.
Besides, loans come with repayment flexibility. This lets you repay loans conveniently without overdoing the monthly budget. Above all, the repayment pattern will be so practical that you can repay loans without facing any strain.
It would be better to use a loan that have repayment feasibility to bid adieu to multiple debt problems at the same time. Check the cost and compare the offers of various lenders.
The bottom line
When you are dependent on benefits, a loan necessity may occur at different points in time. Repaying at once will be very difficult as you will have an irregular source of income. For this reason, a 12 month loan repayment plan will suit you.
It will allow you to pay back a small portion of the borrowed amount in a monthly pattern. The term can extend up to 1 year, and you can enjoy repayment flexibility. This arrangement makes repayment achievable, and you do not have to take on a huge financial burden.
Paul Smith is an established financial author and writer with over nine years of experience, who specialises in personal finance, loans, credit management, and investment strategies for people throughout the UK. Paul’s expertise can be seen on leading loan websites such as Bargainloans. Through his blogs and articles Paul has helped thousands of borrowers make wiser financial decisions while his passion for study encourages people to take control of their finances with greater confidence and clarity
