Being unemployed is not a crime, but it feels like it when you need some money. It’s not like someone chosen to be jobless, but circumstances can fall upon anyone and strip you of your position. COVID 19 was one such event that caused multiple jobless and led people’s life into difficult financial situations.
Whether you are unemployed or in the early phase of your self-employment, or have a very small source of income, you need money for a multitude of reasons like health crises or accidents or car breaks, etc.
It is in general problematic, even impossible sometimes, to get a loan for people between jobs. Lenders are hesitant to approve the loan because they have reason to believe you will be unable to repay the loan. Since you are unemployed, most likely, you lack a consistent source of income.
Although these beliefs can sometimes be true, that does not solve your financial crises. It would be best to locate a lender who would approve a small loan for you.
Who is Eligible to get Benefits?
Govt. of the UK includes benefits for the unemployed in the budget. It is called a Jobseeker’s Allowance (JSA). It is an unemployment payment provided by the UK government to jobless people, provided they are actively looking for work and sitting idly.
It is a type of social security benefit for the people of the UK that is designed to cover basic living expenses while the applicant is between jobs. There are some essential eligibility criteria needed to qualify for this sort of benefit.
To be considered, all applicants must meet all of the following criteria, which are mentioned below:
- The applicant must be 18 years old or above while making the application. However, there are some exceptions where 16–17-year-old can also avail the benefits.
- You must not be enrolled full-time in school or college.
- You must be an inhabitant of the United Kingdom, Scotland, or Wales.
- You must be willing to put in the effort.
- You must be diligently seeking employment.
- Your average weekly working hours should be fewer than 16 hours.
- You must participate in a JSA interview as part of the selection process.
Criteria for Getting a loan for People with Benefits
If you are the person on benefit, it may be complicated to get a loan approved. But there are some loans provided by direct lenders in the UK. Each lender or bank have their terms and conditions to approve any loan.
Nevertheless, it is feasible to receive a loan. There are some very strict conditions that you must fulfil in order to be eligible.
These criteria are listed below:
- You must be able to present documents that show essential aspects of your credit history and your employment situation.
- You’ve missed any additional payments, like a membership fee or others.
- Your current available credit score.
- The number of times the applicant has applied for a loan previously must be provided
- How recently have you been denied a loan?
- Whether you are a registered voter or not
These are some basic criteria, but our lender might ask for some other documents. So do your research prior. Make sure all your paperwork is in order before going to meet the lender.
Types of Instant Loan available for people with benefit
Given below are the series of loans available for people with benefits in the UK.
Secured loans
You must put up a significant asset in the form of collateral to get approval on secured loans. The asset could be your home or car, or any other valuables. These collaterals reduce the risk of loss of money for the lender. Secured loans have a lower risk of losing money than unsecured loans.
If you are on good terms with your family or friend, they might be willing to be your guarantor. Before accepting the loan, your guarantor should have a proper understanding of how it operates.
Guarantor loans
As the name suggests, a guarantor loan requires a reliable person as guarantor. A guarantor is someone who will be accounted for the payment if you cannot pay. Generally, people ask a family member to be a guarantor.
If you are on good terms with your family or friend, they might be willing to be your guarantor. Before accepting the loan, your guarantor should have adequate knowledge of how the loan process will come into practice.
Personal loans
This is the best option available for unemployed people. You won’t need a guarantor or security for this loan. Few lenders will approve you for a personal loan if you have recently lost your job.
If you are granted a loan, the repayments will almost certainly be at a very high-interest rate, so make sure you check the interest rates and compare them before accepting.
Conclusion
If you are a person on benefits in the UK, it might be very difficult for you to get a loan. But there are some loans you can avail of for those emergency situations. Make sure you fulfil all the criteria. Also, check interest rates, terms, and conditions offered by the lender before accepting your loans.
