Christmas is a few days apart, and your preparations must be in full swing. Even though you have trimmed down your Christmas budget, it is not surprising to have gone beyond your budget. That is normal, and there is no need to blame your budgeting method. You can apply for Christmas loans when you need money to finance your Christmas expenses.
These loans are small loans typically aimed at funding celebrations. Like any other small emergency loans, these loans are also applied online and quickly processed. Hardly will any lender loan you more than £1,000. The processing speed of these loans is so fast that you will get money the same day, provided you submit your application before late evening.
The loan will be repaid in either whole or in weekly instalments. To qualify for these loans, you will have to turn in your income statement. What if you are unemployed? Of course, if you are out of work, you cannot get the nod for any type of loan, can you?
Technically, you still have a scope to borrow money, but on specific grounds. When you are jobless, you are allowed to borrow money if you can repay the debt on time. Yes, you can take out loans for people on benefits.
Let us talk more about these loans and how these are useful in different scenarios.
What are loans for people on benefits?
Loans for people on benefits that help tide you over when you are unemployed. Having an income source is a must to qualify for a loan, but it is not necessary to have a fixed source of income. That is truly fine with lenders if you have lost your full-time job because chances are you have been making cash from your side gig, which can be a part-time job, dividend, rent, or freelance income.
If you do not have a side gig, your unemployment benefits will solely serve the purpose of your income. Now, your lender will assess your repaying capacity based on your unemployment benefits. You will be able to get approval if you do not face any complications in paying off your debt.
Remember that your savings cannot be served as your income, so it is a bit difficult to convince a lender to trust your repaying capacity if you are only on benefits.
Can you use loans for people on benefits for Christmas?
Loans on benefits can be used for a variety of reasons, but they should all have a sense of urgency. These loans are small and, hence, ideal for only short-term funding. Further, these loans can be expensive. Firstly, the interest rates will be high for subprime borrowers, and secondly, you are to clear all dues on the due date. This can prove relatively a challenge for you to get rid of all pending payments.
As far as using these loans for your Christmas expenses, you are absolutely free to use them. Christmas funding may be regarded as an emergency because your budget blows up due to unexpected blows to your finances, such as job loss.
Christmas loans may lend you a more considerable sum than loans on benefits. The reason is obvious: you are out of work. Even if it seems that your benefits and income from a side gig are more than enough to settle the debt on time, the risk is too high.
A lender will restrict the lending sum. While you can borrow up to £1,000 with Christmas loans, you might get approval for half of the sum if you are unemployed. There is a chance that you will not get a weekly instalment repayment plan when you take out unemployed loans, as the amount is so small. With Christmas loans, some lenders may allow you to pay down weekly instalments because the size of the loan is slightly bigger.
When you take out loans on benefits for Christmas celebrations, these loans are called Christmas money loans on benefits.
How do you qualify for these unemployed loans on benefits?
Here are the ways to get these loans at the most competitive interest rates:
- You should assess your borrowing capacity
As you are on benefits, you will not have much scope for borrowing a more significant sum. A lender will make you a very risky borrower, so they will likely refuse you a loan. Make sure you borrow money based on your repaying capacity.
Suppose you need £100, which will become £115 after adding the interest. Figure out if you have enough benefits to settle this much debt without struggling with other expenses. Try to borrow a lower sum than you need.
- Borrow money with your co-applicant
You should borrow money from your partner or a family member. This will improve your chances of approval and let you borrow a larger sum. Your co-applicant should have a steady income source. Your lender will look at your benefits and your co-applicant’s income as well.
Now, they will find it less risky to lend you money. However, it is still suggested that you borrow money carefully. You can be trapped in debt if you borrow more than you can repay the debt.
- Do not consider loans with no credit check
A few lenders are out there that lend money without running a credit check. Beware of these loans, as they will be outrageously very expensive. No lender is required to lend you money without a credit check. Such loan providers cannot adhere to legitimate lending practices.
If your credit score is too bad, you should try to do it. Approach those lenders who will make soft inquiries to protect your credit points.
The bottom line
You can use loans for people on benefits for Christmas expenses. You must be able to repay the debt on time. It is suggested that you do not borrow if you will end up exhausting your benefits and savings.
Jessica William operates as a Senior Consultant and Chief Content Editor for 10 years at 1Onefinance. She assists the firm in getting a grip on the new lending laws and regulations. She does so by researching the trends, consumer requirements, and new audience preferences. Jessica is responsible for making important financial and administrative decisions.
Apart from helping consumers with the best solutions, Jessica Williams helps them ensure financial stability. She analyse the business data, finances, expenses, and revenue/ income of customers and determines necessary changes. Jessica finished her Doctorate in finance and law and implements her knowledge to the best interest of the firm and customers.