If you are currently receiving benefits, you may be wondering whether your income status makes you eligible for a loan.
The short answer is: yes. You can still be eligible for a loan while receiving benefits. In fact, some companies offer loans specifically for people receiving benefits or financial support.
However, the types of loans that are available to you may differ. Some loans may have a very high rate for interest and fees. This can make borrowing expensive and will negatively impact you if you struggle to make repayments.
As always, we recommend you do plenty of research on your options before you send off any applications. There may be more suitable options for your circumstances depending on how much it is you need to borrow.
Budgeting loans
If you are receiving benefits, you may be eligible to apply for a budgeting loan. This can help you cover smaller expenses that crop up, such as for travel, clothing, or maintaining your home.
The main perk of a budgeting loan is that it is entirely interest-free. If your benefits pay doesn't quite stretch far enough this month, this could be a great option for you. Usually, repayments for the loan will automatically be taken from your future benefits when you get paid.
You can apply for a budgeting loan if you claim any of the following:
- Pension credit
- Jobseekers allowance
- Income support
- Employment and Support Allowance (ESA)
You can find the form to apply on the government website.
Budget advance
If you are on Universal Credit, you may be eligible for a budgeting advance. It is essentially the same as a budgeting loan but for people claiming Universal Credit. Make sure you apply for the right one depending on which benefits you currently receive.
Credit Union loans
Joining a Credit Union may be another route to getting a loan with lower interest rates. Being part of a credit union can be beneficial as they encourage you to save, and have a cap on the amount of interest they will charge for a loan. The current cap is at 3% in England, making it less likely to spiral out of control.
A credit union is community-run, so to join you must have something in common with its members. This could be working the same occupation, or living in the same geographical area. It may be worth checking out the criteria for credit unions near you - the right one could help you get the loan you need while on benefits.
About Morses Club
During those times when emergency expenses crop up or your budget isn’t quite stretching far enough, you may benefit from one of our quick cash loans. Our small loans aren’t the right solution for everyone so it’s important you understand how it works before you apply.
