Yes, you can apply for a payday loan if you claim government benefits. Payday loans can help borrowers in emergency situations when their money is stretched thin and they have an urgent expense that needs to be paid immediately. Examples include needing to pay for an unexpected medical bill, dental fee, car repair or funeral cost.
However it’s important to note that it is less likely to be accepted for a payday loan if you are on welfare. Payday lenders may be worried about the risk involved in lending money to government benefit claimants, especially if they have a low income too. This is because lenders may be lacking confidence about the claimants ability to repay back the loan on time.
Nevertheless, there are lenders who will offer loans to those on government benefits providing that they pass affordability checks. This guide will delve into further detail on loan approvals and provide some useful tips on how to secure a payday loan if you are on welfare.
How To Apply For A Payday Loan If You Claim Benefits
Applying for a payday loan whilst receiving financial assistance from the government is a very similar process to a borrower who is not claiming benefits. You can submit a loan enquiry through a lender or a broker and they will consider your application against their borrowing criteria. Make sure you check the requirements before applying, which include being a US citizen aged over 18 years old and having a stable income.
If your submission is approved, your lender or broker will transfer the loan amount to your live checking account. Repayment dates will be agreed upon in the contract and usually tend to be at the end of the month after borrowers would have received their paycheck. It’s essential to only take out a payday loan if you are certain you will be able to manage repayments as otherwise you could face high fees or interest charges that could be very stressful to deal with.
Will You Be Accepted For A Payday Loan If You Are Claiming Benefits?
It is certainly possible to be accepted for a loan if you are claiming benefits. Providing that you meet eligibility requirements, have a good credit score and can pass affordability checks, then a payday loan can be approved even if government benefits are your main or only source of regular income.
If you are on welfare but have a poor credit history or have applied for multiple lines of credit, then it becomes trickier to be accepted for a payday loan. Likewise if you have previously declared bankruptcy then the lender will be more skeptical and may reject your loan application.
Which Payday Lenders Will Accept You If You Claim Benefits?
There are a handful of lenders who will certainly accept claimants. For instance, Dollar Hand works with a variety of reputable lending partners who will consider customers from a variety of financial backgrounds and who even offer bad credit loans.
This selection of lenders may consider the benefits as a form of a regular income which means that claimants could meet their eligibility criteria providing that they also met the other requirements. Depending on the nature of the benefits, different lenders will cater to their customers’ borrowing needs accordingly and offer what they believe is the most suitable loan amount and loan term. For instance, those on a longer term form of benefits would most likely receive a bigger package than those on short term or temporary welfare.
Often it will be short-term loan lenders that will accept those on welfare and sometimes they may request a guarantor as a precaution. It is also likely that a customer claiming benefits may be offered a loan agreement with higher interest rates on the repayments due to the larger level of risk involved since the claimants ability to repay the loan on time will appear less secure.
What Other Types Of Loans May Claimants Be Able To Borrow?
There are other types of loans that welfare claimants may also qualify for. For instance secured loans, which allows customers to borrow money by tying repayments to an asset such as a home or a car. This would most likely have lower interest rates since the risk to the lender becomes minimal since they can use the assets as a last resort if the borrower fails to repay back the loan.
Doorstep loans are also an option whereby a loan agent operates face-to-face with their customer in a personal manner. The agent will make regular visits to the borrower’s home to collect repayments each week at an agreed upon time.
Likewise, claimants could consider a guarantor loan which is when someone else, typically a family member or close friend, will cosign a loan and take responsibility for making repayments if the borrower is unable to do so. In this case a guarantor will also need to pass the eligibility requirements, affordability checks and credit checks to qualify. Ideally, the guarantor will be employed with a stable income and not be claiming any welfare benefits.