Loans for people on benefits

For people on benefits, getting a loan can be a frustrating process. But there are specialist lenders who could step in when a mainstream source can't help.

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Late repayments can cause you serious money problems. See our debt help guides.

What are my loan options if I’m on benefits?

Some lenders are reluctant to take applicants receiving benefits, deeming them too risky to lend money to. But there are some lenders who will consider you if you’re getting benefits.

  • Guarantor loans. A guarantor, who is contractually obliged repay any debt if you’ve failed to do so, helps to make lenders feel comfortable approving applicants on a low income. By seeking out guarantor loans, you therefore might be able to access deals that would otherwise have been out of your reach.
  • Secured loans. Not for the faint-hearted, a secured loan lets you put up an asset as collateral against late repayments. This also helps lenders see you a less of a risk when assessing your creditworthiness. If you have a home – even with an existing mortgage – you may be able to offer property equity as collateral. However, your home would be at risk if you fail to make repayments.
  • Credit-builder credit cards. These credit cards are aimed at applicants with low income and poor credit ratings. The credit limits are typically lower than traditional credit cards and the APR is often very high. Nevertheless, the eligibility criteria are much looser than those of other cards, so it could be a useful credit option for people on benefits.
  • Vehicle finance plans. This is a secured loan used to buy a new vehicle. The cost of the purchase is split into monthly repayments with interest added on top, and the vehicle itself is used as collateral on the loan.
  • Specialist lenders. Some lenders specialise in offering loans to people who have a low income or a poor credit history. These loans do have higher interest rates than those on offer from traditional lenders though, so ensure you can meet the monthly repayments before applying.
  • Payday loans. These short term loans are easy to be approved for, but the interest rates are astronomical. Consider these a last resort once all other avenues have been explored.

Does receiving benefits affect my credit score?

The benefits you receive from the government do not appear on your credit record and therefore have no direct impact on your eligibility for loans.

However, the fact that you’re eligible for government loans nearly always means that you have some sort of difficulty with your income.

Your regular income will be assessed by lenders, and if it’s believed there’s a risk of you struggling to meet your monthly repayments, your application will be rejected.

If you agree that meeting the repayments will be difficult, you shouldn’t apply in the first place. However, for many recipients of benefits, this isn’t the case at all.

How to get a loan while receiving benefits

  • Budgeting. Perhaps the most important step is ensuring you can afford the monthly repayments on any loan you’re approved for. These loans are meant to provide additional financial assistance, not cause more troubles.
  • Check your credit record. Order a free credit check from the likes of Experian, TransUnion (formerly Callcredit) or Equifax. This will give you an idea of how risky lenders are likely to deem you. Remember, a failed credit application will harm your credit score further, so choose the products you apply for wisely.
  • Compare lenders. Use the comparison tables on to compare the lenders.
  • Apply. The easiest way to apply is through the lender’s website. The lender will want some personal details, financial details and to run a credit check. The outcome of your application will be revealed within seconds, and you could have the money in your account that same day.

Dos and don’ts


  • Compare the best lenders with
  • Check the lender’s eligibility criteria before applying for a loan
  • Ensure you meet your monthly repayments on time


  • Accept a loan with repayments you’ll struggle to repay
  • Submit multiple credit applications in a short time period

What about a broker?

As long as you bear in mind that it’s unlikely to check the whole market, but instead subsection of lenders with whom it has an arrangement, then a broker can take the strain out of finding suitable lenders. Brokers find the best rate available to you from their panel of lenders, taking into account your individual circumstances. Generally this service is free, because the broker will earn a referral fee from the lender.

Some brokers or “matching services” can now run soft searches with a range of lenders in seconds, meaning that without any impact on your credit score you’ll be able to get realistic rate quotes for loans you’re likely to be approved for. This can be a smart way to avoid disappointment, protect your credit score and focus on lenders likely to approve you.

The bottom line

It’s unfortunate that people on benefits have more difficulty accessing traditional loans, as they’re often among the people who need them the most. Nevertheless, if you’re in this situation, it’s worth remembering that there are many alternative forms of credit and by following the tips above and comparing options using the comparison tables, you should be able to find a great deal for your needs.

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.

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8 Responses

    Default Gravatar
    CazFebruary 2, 2019

    Hi, I am trying to get a loan for 7000 as got few things to pay off and due to moving into a house but can’t seem to get anywhere as I’m on benefit. Any idea how I can do this, please?

      JoshuaFebruary 7, 2019Finder

      Hi Caz,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I’m sorry to hear about your situation. It is true that by of yourself, it might be difficult for you to get a loan. However, after trying to apply for a loan and you still didn’t get approved, you might try other options.

      Please review the details written under the subheading “What are my credit options if I’m on benefits?” It lists some of your other options such as guarantor loans, secured loans, credit-builder credit cards, and others.

      Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision. Moreover, check the eligibility requirements as well and consider whether the product is right for you.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


    Default Gravatar
    NaimaJanuary 15, 2019

    Hi I want to apply for a loan.

      JhezelynJanuary 17, 2019Finder

      Hello Naima,

      Thank you for your comment.

      If you’re referring to applying for a loan while on benefits, reading the guide above may be beneficial to you as you can get tips on what to look out for when looking for a loan. Please check the type of loans you need to get when you’re on benefits and make sure that you meet the criteria set out by the lender.

      Alternatively, you may compare personal loan products on this page. Please compare the lenders on the table and check if it suits you.

      Please click the Go to Site button of your preferred loan product to be redirected to the lender’s page. Please make sure that you’ve read the relevant T&Cs or PDS of the loan products before making a decision and consider whether the product is right for you.


    Default Gravatar
    SusanOctober 11, 2018

    I am on benefits but I need a small loan. Can you help as most of the loans you need to have a job. Thank you.

      CharisseOctober 11, 2018Finder

      Hi Susan,

      Thanks for reaching out to finder.

      I understand it could be quite challenging to get a loan when you are receiving benefits however you still have options that you can consider.

      You can apply for a guarantor loan. You can go to this page to learn more about how guarantor loans work and also see lenders offering this type of loan.

      Another type of loan you can consider is Payday loan. Most payday loan lenders consider benefits as an alternative source of income. To learn more about payday loans and see lenders offering this type of loan, you can go here.

      Before applying for any loan, please check the eligibility criteria and read the loan terms of agreement to see whether it is right for you.

      I hope this helps.


    Default Gravatar
    MarkSeptember 17, 2018

    Been trying to pay off the overdraft but Can’t afford to pay the full amount tryed to ask the bank for a loan but they said they don’t lend to people that are on benifits but they let you take out more on the overdraft.

      JoshuaSeptember 19, 2018Finder

      Hi Mark,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      I’m sorry to hear about your situation. If you struggle to pay off an overdraft, then it would be more difficult for you to get a loan from the same bank. What you can do is try to apply for a loan from the providers listed on this page. Please review the criteria, details of the loan product and contact the lender directly to discuss your loan options and eligibility.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


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