Unemployed, on benefit and need a loan?

Unemployed, on benefit and need a loan?

If this is you then I’m not going to be the first person to tell you your options are restricted. The best place to start if you find yourself in this situation is to look at what you can afford to pay back and over how long. The chances are things are going to be tight and let’s face it the rates most companies charge to the unemployed or those people on benefits are quite high which for you is bad. But here is where karma can play a part, if you are trustworthy and people have faith in you you are likely to be able to find someone to back your effort to get a loan. These kinds of people are called guarantors and they are used in a financial product called guarantor loans.

Why are guarantor loans good for someone on benefits or the unemployed?

Because guarantor loans rely on the loan being secured by the guarantor there is no real credit check performed upon you by the guarantor loan lender. The guarantor is credit checked and they must prove homeownership but this is not usually a problem. The key thing is that they believe you when you say you can afford to pay the loan back, and this level of trust should not be treated lightly. Your other options of loans without a guarantor are going to be few and far between and exceptionally costly. Doorstep lenders usually only lend up to £1000 and often they are simple too expensive to be worth getting. Guarantor loans are typically around 40% APR as opposed to the 200% often associated with the dootstep lenders. At the extreme are the payday lenders charging up to 2300% APR which makes a guarantor loan look postively amazing.

Where to get a guarantor loan?

There are several guarantor loan lenders in the UK the best known being FLM Loans based in Bournemouth. They only do guarantor loans and as such are specialists in helping the unemployed and people on benefits get credit – up to £3000 – when the high street lenders have turned them down.

Responsible Borrowing

Make sure you understand how much you can afford to pay back each month, and ensure that your guarantor understands all the implications of being a guarantor.