Generally speaking, taking out a loan when you are claiming benefits is rarely a great idea, as paying back the loan could prove difficult. That being said, we don’t always have the luxury of choice and sometimes we just have to do what we have to do. There are loans for people on benefits, and more lenders are becoming willing to lend to claimants all the time.
If you are struggling to make ends meet, whether you are claiming benefits or not, and you are in debt then you should take a look at the Citizens Advice website for some great advice on what to do.
If however, you are looking for a loan that you will be able to manage, while claiming benefits, then there are ways for you to (more) easily pay it back.
Never Borrow More Than You Need
A common mistake when borrowing, whether on benefits or not, is taking out a loan that is of a higher value than is needed. Some lenders have a lower limit they will offer, as well as a higher one, so shop around until you find one that offers as close to what you need as possible.
If lender A has a lower limit of £500, and lender B has a lower limit of £150 and you only need to borrow £100… You get the idea. Borrowing more than you need is going to get you deeper into trouble.
Set Yourself Repayment Reminders
Not all of us has perfect recall, far from it in fact, and when we have stresses such as financial worries our memory recall will suffer even more. This is perfectly natural, but forgetting a repayment date could be disastrous.
Most of us have calendars on our phones, so be sure to set an appointment reminder for the day before a payment is due – or the actual day if you live dangerously. Failing that, put a note on your fridge or somewhere else you are sure to see it.
Don’t Use Your Cards
Even if you don’t have a credit card, carrying a debit around (especially a contactless one) is a temptation too far for many people. Keep cash in your wallet/purse. Set yourself a weekly budget for shopping, withdraw as close to that amount as you can, then don’t look at your card again until you need to food shop again.
Cards are just too convenient and most of us overspend when we go shopping because the card makes it too easy. Ditch the plastic and force yourself to use cash. Also, never do a food shop when you are hungry!
Set Money Aside to Make Repayments
This sounds obvious but you’d be surprised at how many people either don’t bother or don’t give it a thought. If you are able, put change aside every time you get some. When paying by cash in a shop, for example, put the change (everything that isn’t a note, unless you can put the odd note in there) in a jar.
A couple of working days before a payment is due, take the cash you have saved up and take it to the bank. Safely ensconced in your bank account the money you’ve saved is ready to be put toward your repayment. If you have saved enough, and depending on how much you borrowed, that ‘small change’ just might take care of that month’s payment all on its own.
Whatever loan you take out, whatever the amount and whatever it is for, make sure (before you apply) that you will be able to budget for the monthly repayments. One of the fastest ways that you can make your financial situation worse is by taking out a loan that you cannot repay.