Government Alternative to Car Credit for People on Benefits
One quick search for car credit for people on benefits will reveal a host of brokers, not lenders, who claim to offer car loans and other sources of finance to people on benefits. In reality if you're on benefits you get a fixed amount each month and this isn't normally enough to live off. You are not in employment and loan companies shouldn't really be offering anything to you if you're on benefits.
A loan shark (illegal lender) is defined in part as a lender that "concentrates lending to deprived areas or deprived groups of people". For whatever reason you're on benefits you still only receive around £50 per week to spend, not including having your house rent or other expenses paid. As someone who has a low income from benefits you're considered a "high risk" because you might default, which means higher APR rates and more to pay back. It's safe to say that any lender who offers car credit for people on benefits with high interest rates could be considered a loan shark for praying on people with low income.
Many brokers offer car credit for people on disabled benefits. They will still offer a higher APR and draw people in by offering "guaranteed" finance to buy a car. If you're on benefits because of a disability then you don't need to go to a broker or even look for a loan. You can find help from government schemes and Directgov, as opposed to lenders who operate similar to loan sharks.
So What Are the Alternatives to Car Credit for People On Benefits?
The simple answer is the place where you receive your benefits. Check out the Directgov website (link below) for all forms of finance - alternative car log book loans can be crisis loans for emergency, budgeting loans to help towards the cost of a car if you've been on benefits for a long time and pages of information for people on disability benefits. Loans from Directgov are interest free and paid back on an affordable basis - they won't leave you with £20 a month like other lenders.
You might be able to find car credit for people on benefits by looking for guarantor credit schemes. These are schemes that ask for a guarantor to supply payment should you fail and the APR is normally lower, but if your only income is from benefits you will still struggle to pay back the loan whether you have a guarantor or not.
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