Loans For People On Benefits

Purpose of Loan for People on Benefits

Benefits alone does not suffice to live a decent life. The cost of living is high and without a regular source of income, it becomes difficult to meet basic needs. It is generally understood that people on benefits do not find it easy to get loans due to lack of financial stability. However, there are lenders who offer loans to people on benefits. Some of these loans are:

Secured Loans :

A loan is offered with a security collateral and most of the times, this is a car. The interest rate tends to be lower in this case.

Home Finance Loans :

This loan can be availed by those people who have been living on benefits for some years. The money can be used for any purpose; however, repayments happens on a weekly basis. This type of loan is quite expensive.

Budget Loans :

This type of loan is interest free with long tenure of repayment. It is available to those who have been claiming the benefits for a year.

Payday Loans :

This loan is rather expensive as the loan amount is small and attracts higher rate of interest. It can be repaid when benefits are received by the borrower.

Features of Loan for People on Benefits

Loans for people on benefits is a special type of loan. Some of the features of this product are:

• In most cases, this loan can be availed without any collateral.
• Very less paperwork is required as the loan amounts are small or repayments are made in close gaps.
• Interest rates vary with the different types of loans and lenders. Some do not charge any interest whereas other charge as high as 30%.
• There is no fee to be paid to get the loan disbursed.
• This type of loan is helpful to get liquidity in hand when there is less or no finance available to meet current needs.
• These loans can be used for any purpose. There is no mandatory requirement for the end use of the money.
• This loan can be used for many purposes like new projects, expansion of current business, marriage, renovation/repairs and purchase of a new house.

Eligibility Criteria for Loan for People on Benefits

• Resident of that particular country
• Should be 18 years of age and above
• Should have a bank account
• Should be using financial aid from the government

Loan for People on Benefits – Indian Context

Swarna Jayanthi Shahri Rozgar Yojana is a specially designed loan aimed at people living below poverty line. It helps in providing some employment opportunity and help the individual to be self-sufficient. The loan can be availed by the unemployed both in rural and urban areas. Maximum loan amount available is Rs. 50,000 to set up a business. Women get extra subsidy up to 50% of the project cost. Repayment period varies from 3 to 7 years.

Swarna Jayanti Gram Swarozgar Yojana is another type of loan that helps in self-employment opportunities across the rural areas of the country. Loan amount varies from Rs. 50,000 and can go up to Rs. 6 Lakhs. Different subsidies are available depending on the background and the need. Repayment period varies from 5 to 9 years.

Prime Mininster’s Employment Generation Scheme is aimed at creating employment opportunities for those not having a regular source of income in both rural and urban areas. This loan helps in setting up a self-employment business. The loan amount available is high at Rs. 25 Lakhs. Repayment period can be between 3 and 7 years.

Documents and eligibility required to avail these schemes from the Government are:

• Minimum age of 18 years
• Must hold the below poverty line ration card
• Passport size photos
• Knowledge of the business to be set up
• Minimum educational qualification maybe required for certain schemes

FAQs: Loans for People on Benefits