Finding a no guarantor loan if you have a poor or bad credit rating can be difficult. Lenders will fall over themselves to offer you a loan if your credit rating is perfect, but many run a mile if you credit rating is poor. Therefore, finding a loan with a poor credit rating when you are on benefits must seem an impossible feat. So, is it possible to get loans for bad credit no guarantor on benefits?
The answer to that question would be dependent on the type of benefit you are paid each month. We work with a panel of lenders in the UK who will consider all applications and who class certain benefits as an income.
Benefits That Might be classed as Income
Lenders may class benefits as being a regular income if you receive one of the following:
- Disability Working Allowance;
- Incapacity Benefit;
- Severe Disablement Benefit;
- Disability Living Allowance;
- Industrial Injuries Disablement;
- Family Tax Credit;
- Working Tax Credit;
- Tax Credit that is part of your net pay;
- Fostering income;
- Family allowance.
Benefits Generally Not Classed As Income
There are some benefits that the majority of lenders will not class as being a regular income and they are as follows:
- Income Support;
- Child Support;
- Housing Benefit;
- Job Seekers Allowance;
- Pension Credit.
The above benefits are only guidelines to give you an idea of the types of benefits that lenders might consider an income.
Just because the benefit you receive is on the list it does not mean you are guaranteed a loan.
Along with needing to have a regular income each month you also have to meet certain other requirements. These include:
- Being over 18 years of age;
- Living in the United Kingdom;
- Having a bank account in your name;
- A debit card is attached to your bank account and direct debits can be set up on the account.
Loans for Bad Credit No Guarantor on Benefits – Types of Loans Available
So, now we have talked about the benefits that lenders might class as a regular income and other criteria you need to meet to be eligible for a loan, let’s look at the different types of loans available.
Consider a Payday Loan
One of the loans that do not need a guarantor which people on benefits generally find easier to be approved for is a payday loan.
Small Amount of Money Paid Within 1 to 3 Months
The payday loan is suitable if you only need to borrow a small sum of money and know that you can afford to repay it when your next payday comes around. However, while they are called “payday” loans, lenders will usually allow you to spread the cost of the loan repayment for up to three paydays.
When working out paydays lenders class them as months as most people are paid on a monthly basis. Therefore, the loan you would take would be for one to three months.
Most payday lenders will allow you to borrow between £100 and £500 with this type of loan.
Payday Loans for Emergency Financial Outlays
Loans of this type of usually applied for when a sudden financial emergency has reared its ugly head. This might be such as your vehicle breaking down and you need to have it towed to a garage to be repaired. You might have forgotten about a large bill, the final reminder has dropped through the door, and you need to pay it before your next payday.
These are just a couple of instances where a payday loan might come in handy. You could apply online and if approved money could be paid into your bank account on the same day.
Lenders will not pay as much attention to your credit file as they would if you asked to borrow a larger sum of money, but they will still check.
Is a Short-term Loan Suitable?
Short-term loans are among the offered loans for bad credit no guarantor on benefits that might be more suitable if you need to borrow more than what the payday loan allows, and you want to spread the cost of borrowing over longer.
Borrow Up To £1,000 Pay within 12-Months
Most lenders will allow you to borrow between £500 and £1,000 but this depends on the lender, with some perhaps offering more. Approval also depends on your credit rating and your ability to be able to repay the loan.
Most lenders will allow you to spread out the cost of borrowing for up to one year, again, this may differ between lenders with some perhaps giving you more time.
Again, lenders are going to make a credit check but if the amount you have asked to borrow is relatively small, they may not look too deeply into it.
Is A Personal Loan a Suitable Type of Loan for You?
Another type of loan that does not need a guarantor is a personal loan. Whether you will be approved for a personal loan is going to boil down to just how bad your credit rating is.
Borrow Up To £5,000 Over 36 Months
Lenders will usually allow you to borrow up to £5,000 with a personal loan and this is a bigger risk to them than had you asked to borrow a smaller sum of money.
Lenders always check credit ratings with any loan but with a loan of this size, they are going to look into your credit rating in more detail.
Lenders will usually check to find out if you have missed any repayments in the past, how much you owe, whether you have any CCJs against you and more.
While it is not as easy to be approved for a personal loan, as it is a short-term or payday loan, we do work with lenders who will consider your current circumstances and ability to repay.
Which Loan Is Suitable?
Now you know the options available for loans for bad credit no guarantor on benefits. All that is left for you to do is choose the most suitable loan for your needs and apply. If you want between £100 and £500 choose a payday loan, between £500 and £1,000, a short-term loan or if you need to borrow up to £5,000, you might think about a personal loan.