Living on benefits is never easy. Planning your life around the schedule of your benefit payments is inconvenient at the best of the times. Often it\u2019s completely impossible.<\/p>\n
It\u2019s a fact of life that, inevitably, we all meet with unexpected expenses from time to time. If this happens in-between your benefit payments things can get a little too close for comfort.<\/p>\n
One of the most effective ways to fashion yourself some breathing room is by taking out a short term loan<\/a>. However, there are a number of things to consider first.<\/p>\n You will find it practically impossible, especially in today\u2019s financial climate, to get a loan from a major bank. If you are considering getting a loan whilst on benefits<\/a> then, unfortunately, you will have forget about the interest rates you have seen advertised on the high street.<\/p>\n The lenders you are more likely to secure a loan from operate in what is known as the \u201csub-prime\u201d market. Whilst you may be used to hearing of interest rates between around 10%-20%, the typical APR on a loan form a sub-prime lender will be somewhere from 500%-4,000%. Some are in the tens of thousands.<\/p>\n For this reason it is best to borrow on small amounts for very small periods of time, otherwise the amount owed will rise rapidly and you may risk defaulting your repayments. This will impact on your credit rating.<\/p>\n If you are unemployed the absolute largest amount you are likely to secure a loan for is \u00a33,000, however, only very few lenders offer this much to people who are on social security. Their interest rates are very high and their collection policies are inflexible, meaning if you are unable to keep up with repayments, which realistically, considering the APR, is likely, you\u2019ll be facing all sorts of trouble. Event then, these lenders will only lend an amount such as \u00a33,000 if you have a guarantor.<\/p>\n A guarantor is somebody who is willing to make your repayments for you should you fail to do so. It can be anybody but it is normally a close friend or family member. Being a guarantor is a big commitment as they are making themselves legally liable to pay off the loan if you can\u2019t and as such guarantor loans need to be thought about carefully.<\/p>\n Furthermore, they will need to have a job with a decent income and a good credit history, as they will be credit checked by the lender. This means they can\u2019t have received a CCJ or defaulted a payment in the last six years, or be on an IVA or be bankrupt<\/a>.<\/p>\n If you are lucky enough to have someone willing to stand as a guarantor for you, it\u2019s worth figuring out between you if it would not be wiser for the guarantor to get a loan in their name and then lend to you as a friend. This is also a big commitment but may ultimately be cheaper and there are typically more lenders for people with good credit then there are guarantor loan lenders.<\/p>\n For one thing, with their good credit history and income, they should be able to go to a high street lender and get a loan with a considerably lower APR. Secondly, high street lenders can be easier to negotiate with if you run into any troubles and so will your friend\/relative.<\/p>\n If you don\u2019t have a guarantor, which most people don\u2019t, you\u2019ll find it hard to get more than \u00a31,000.<\/p>\nInterest Rates<\/h2>\n
Loan Amounts and Guarantors<\/h2>\n
Credit Checks and Credit History<\/h2>\n