I Think I Might Need A Loan

Firstly, we recommend taking a look at some of our other sections on budgeting, bills, what you’re entitled to, and Universal Credit before you consider taking out a loan.

Avoid Being Exploited

At the Just Finance Foundation we’re aware that Loan Sharks and exploitative lenders will be using the Coronavirus period to target those most vulnerable, particularly those already in arrears. Not sure what a Loan Shark is? A Loan Shark is a lender who might:

  • offer little or no paperwork, such as a credit agreement or record of payments

  • refuse to give information, such as the interest rate or how much you owe

  • take items as security, such as passports, bank cards or driving licences

  • increase the debt or add additional charges at any time

  • refuse to allow you to settle your debt

  • get nasty - they might resort to intimidation, threats or violence.

For more information on how to spot and report a Loan Shark, click here.

Debt

If you don’t have any savings and are facing an emergency cash shortfall, borrowing may feel like your only option.

If you are already in arrears, you may be able to suspend your debt payments. Visit our Debt section of our Coronavirus Help Hub for more information on this.

Borrowing from family or friends could be a safe option?

If they can lend you the extra cash, this could be a cheap way of getting extra money without resorting to Payday lenders or other types of high cost credit. They are also likely be more flexible about how you pay the money back. Remember to check if they can afford it and write up an agreement to maintain trust.

Remember now is a difficult time for all. There is no shame in asking for money.

Hopefully this will be a quick and easy short-term arrangement but you might want to read the Money Advice Services’ guide on borrowing money from family and friends to make sure there are no arguments further down the line, especially if they get sick and need the money back in a hurry.

Shopping around is worth the time if you really need to borrow money

If you need to borrow, choosing the right type of credit or loan for your situation can save you paying more than you need to.

When you shop around and compare deals, look at:

  • the interest rate and the Annual Percentage Rate (APR)

  • how much you will repay in total and whether you can afford the repayments

  • any penalties for missed or late payments

  • the cost per week or month and whether this might vary.

The money Advice Service has some guidance on choosing credit here

Lending Through Benefits

If you have been on benefits (legacy or UC) for 26 weeks, you could be entitled to a Budgeting Loan or Budgeting Advance.

The loans are 0% interest - meaning you won’t have to pay anything on top of what you borrow. However, the repayments are taken from your future benefit payments - meaning you’ll have less money in future months.

You can find out more information about these loans here: Budgeting Loan and Advance

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Responsible Credit Providers

If you do find yourself in the place where you do need a loan, the Finding Finance website is a good place to start. They provide a directory of finance providers that is fair and also offer support and advice.

You could also take a look at your local Credit Union. Credit Unions offer loans at rates in which are lower than many traditional lenders (such as banks and payday lenders).

You can have a search for your local Credit Union using this link: Find Your Credit Union

Not sure what a Credit Union is? Check out the short video!