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Monday, 14 July 2014

Loans for People on Benefits - Friends and Family

One of the frequent questions I get asked on the Millionaires Giving Money Blog is do loans for people on benefits really exist? After receiving a handful of these emails and responding to them I was inspired to share 20 loan options for people who are on benefits, unemployed, disabled or have really bad credit. Before you take out a loan it's always important to consider the APR interest rate and you should try and negotiate the lowest rate possible. You should also consider how much you are borrowing and how much you will be paying back in total. The most important factor is affordability of repayments. It's important to find out what your income is as well as your expenditure, if you are living within your means and have money to spare then you have the confidence that you'll be able to repay the loan as it's affordable. So without further ADO, here is IDEA 2 of 20.

Loans for People on Benefits - Ask Friends and Family

This option is definitely worth considering because you will probably be able to negotiate an interest free loan so you only payback what you borrow. Borrowing from friends and family might be difficult as pride gets in the way. You should also consider the risk factors and what would happen if you fail to repay the loan. After considering the pros and cons you should consider this option because you can save a lot of money on repayments when compared with taking out a payday loan.

To get started make the process as professional as possible. First start off by explaining to your friends and family how much money you need and why you need it. You also need to explain why you are having difficulties coming up with the money. Offer your income and expenses statement to show your financial circumstances as this will give them the confidence to loan you the money. You should also use collateral in the event you cannot pay back the money, this will avoid any breakdown in relationship. Another tip is to create a repayments schedule and then offer to create a direct payment from your bank to their bank so the payments are guaranteed to be on time and there is no need to be chasing for the money.

If you can offer a professional approach to borrowing money then there is a good chance you will receive your loan from your friends and family. You should also negotiate the loan APR. Most friends and family will refuse to accept interest however if you offer a few percent as a gesture of goodwill they will appreciate the thought. 

Before you take out any loan its important to consider the need. You should also look at the how much you are borrowing and how much you will pay back eventually over the amortized loan period. You should also consider the APR interest and negotiate the lowest possible rate so that you pay less in interest. Always consider affordability after filling out an income and expenses form so that you can determine whether the loan repayments are affordable. Friends and family loans for people on benefits are definitely worth considering if you want to save money on APR.    

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