Getting A Loan On Benefits

Normally lenders wouldn't even think about lending money to someone whose only income is benefits. The reasons behind this are simple.... To start with benefits aren't considered to be provided for using to repay finance, they are there for day to day essentials and for living on, the other, and main reason is that lenders don't feel that benefit payments provide enough affordability to repay a loan - therefore they reject you outright.

However, there are situations where your benefit payments can indeed make payments on a loan, or perhaps you have other income that a typical lender wouldn't accept as legitimate income to put towards your income calculations. So what do you do in this situation? It's clearly frustrating having enough money to repay a loan, but not actually being able to secure the finance without resorting to extortionate interest charging loan sharks.

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Thankfully there is now a loan product that may change this if you can find a suitable homeowner 'backer' for your loan. These loans are called guarantor loans and are aimed at people with bad or poor credit history, who don't have standard income types or for whatever reason fall short of being able to get a normal unsecured loan. The loans work by requiring a guarantor to back the main applicant and agree to potentially make repayments should the applicant be unable to do so after taking up the finance. So you can see how this gives extra security to the lending companies and allows these loans to work in the real world. Generally, you can be considered for a loan if you are receiving benefits or other income types and are sure you can afford to meet the monthly repayments. If you fall short, then your guarantor has to step in and cover the payments until you are once again able to - hence the need for the guarantor to be a homeowner as it adds extra security to the lending arrangement.

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