How much cash can you borrow when you are on benefits?
Job loss should not come as a shock because no company can provide you with job security. Numerous factors are responsible for causing unemployment. Though the unemployment rate has whittled down in the recent few years, this cannot be extirpated. Unemployment is a temporary phase, but it is quite challenging to endure. Your financial condition could be ruined if you take a longer time to land a new job. Savings quickly deplete, and money stops coming in.
After failing your job, the first speciality you should do is apply for benefits. The UK government provides innumerable benefits to the unemployed. Nonetheless, individually of, them is subject to thorough terms and conditions. If you do not meet them, you cannot qualify for benefits. This will worsen your finances. You will struggle even more to get by unless you land a new employment.
Thankfully, there is a possibility of applying for a loan. If you are struggling to get along during job loss, you can take out small loans. However, it is not as straightforward as it says. In order to qualify for a loan, you will have to prove your repaying capacity. No lender would ever approbate your application if they find that you cannot repay your debt on time. Though you do not have a full-time job, you should still have some passive income source to settle your obligation.
How much funds can you take while being on benefits?
When you are on benefits, you would be able to borrow only a small amount of finances. This is because you do not have fixed employment. A lender would find you a risky borrower even though you have a passive income source. Most lenders will never lend you more than £1,000, provided your repaying capacity is strong enough.
- A £1,000 is only the maximum limit
While lenders say that they could approve up to £1,000 even though you are not employed, it is likely that they would never lend this much money. A £1,000 loan is not so small that you can pay it off from your pocket when you are unemployed.
It is worth noting that you will be living off your savings and passive income sources. A lender would carefully analyse your repaying capacity before signing off on this much money. Of course, you will have to prove to your lender that you can easily meet your daily expenses along with debt payments. It means you will have to be earning £2,000. This amount may vary by a number of factors, such as your lifestyle and the integer of dependents.
- Most lenders cap on £500
As unemployment loans are small loans, lenders do not approve more than £500. Because these loans are employed only to meet small emergency expenses, they are required to be discharged in full. It could be quite challenging to settle the dues. If you are only living off unemployment benefits, it would be even more challenging.
However, do not treat your savings as your income because you will end up with no money. Eventually, you will fall into a deep hole of debt.
Is it possible to borrow up to £2,000 when on benefits?
You can think of any amount of money as long as you prove your repaying capacity. Getting an instant decision on 24 month loans is not a cinch if your financial condition is strong enough to repay the debt.
Since the borrowing amount of money is large, you will be asked to settle your dues in fixed instalments. When the borrowing amount is as small as £500, you will have to pay off the debt once and for all, but when it is more than £1,000, it can be divided across a few months. You will have to pay down a fixed sum of money every month.
Since the whole debt is spread across months, you can easily manage payments. There is less chance of falling behind on payments. Qualifying for 2K pound loans on benefits is still not plain sailing.
Innumerable factors would be taken into consideration to determine your repaying capacity. Even though you have a very strong passive income source or multiple passive income streams, you might find it hard to qualify for these loans. A golden rule of thumb says that other factors, such as the number of people dependent on your income, might significantly affect your borrowing ability.
In addition, your credit score plays a crucial role. While lending you such a large amount of money in the absence of a fixed job, lenders would want you to have a decent credit report. It suggests that you have been loyal to your payments in the past, so you will likely be able to settle your dues on time this time, too.
Experts enjoin that you must take out unemployment loans only when you need a paltry sum such as £100 or £200 because these loans carry high interest rates. There is no point in taking out large loans during unemployment. You are not going to be without a job throughout your life. Until you land a new job, you should try to whittle down your expenses.
- Create a budget and spend money only on essential items.
- Say no to discretionary expenses such as dining out, night out, etc.
- Save money on groceries and other essential expenses.
- Take advantage of coupons, discounts and special offers during shopping.
- Avoid impulsive purchase.’
Summing up
You can borrow money despite being on benefits, and when you do not have a passive income source, unemployment benefits will be regarded as your income. It depends on a lender how much they would lend you, but they do not approve a larger sum. Hardly any lender signs off on more than £500, provided you are able to discharge it on time without any difficulty.
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.
