Even a person with a disability, living on a low income, sometimes needs to borrow money. And even if it seems the situation is not favoring a disabled or ill person, there are certain ways to take loans for disabled, and at the same time avoiding to take out expensive and risky products.
You have legal rights, so don’t be afraid to use them. Being ill or disabled shouldn’t prevent you from applying for a loan. Not all disabilities are physically obvious either. So discriminatory lending decisions are not allowed. Online lenders and financial institutions must treat you the same way as the non-disabled customers.
Loans for Disabled People – A Good Idea?
Wheelchair access, grab handles and lowering kitchen benches are good examples of works you might need to do in your home to improve accessibility. Getting additional funds to finance this work is a good reason for a loan application.
Personal Loan Application
The processing of a loan for disabled persons is the same as for a person without a disability. You have to show the lender that you have sufficient income to repay the loan. The lender will also carry out a credit check prior to approval.
There is a slight advantage with regard to loan approval if you are receiving benefits because that’s guaranteed income from the government. That fact may also swing a lender to be less critical of a low credit score.
If You are on a Disability Income
It’s highly unlikely you will get a loan approved by a major bank.
But don’t apply for loans with lenders who advertise on the internet with ‘loans for people on benefits’ or ‘disability loans’. The APR’s of these lenders could be anywhere between 500% and 4,000%, not the expected rate of 10% – 20%.
Avoid Payday Loans
You should consider other options if you are tempted to apply for a payday loan. While payday loans are advertised as being easy, simple, and fast, if not handled correctly they can turn into another troublesome debt.
In addition, like any loans on which you make late payments, your credit rating will be affected.
Consider the Loan Impact on Your SSI Report
However, there are certain things to consider when applying for a loan as the additional money may affect your benefit payments.
As an example:
- If you are receiving SSI benefits and you get a loan, that loan money has to be spent in the same month you receive it.
- If you don’t use the loan money, the additional funds must be declared in your following month’s SSI report that you file.
If You are Working
Nevertheless, before taking such a loan, you should first ask yourself the following questions:
- Firstly, can you afford the loan?
- Find out the best way to go about borrowing the money you need.
- Make a plan and a schedule of when and how you are going to repay the money.
Try Alternative Options
Instead of getting a loan, look at some alternatives. How do you pay overdue bills without getting a loan? If it’s already a challenge financially for you to pay household bills and other essentials, then it’s going to be a mistake to take out a loan. And if any of those bills are already in arrears, or you have other debts, then borrowing money is only going to make it worse.
Negotiate With Your Lender
It’s better to speak to those whom you owe money and set up a repayment plan. There are many organizations out there that can help you with confidential debt advice.
Don’t be tempted to take out a payday loan to cover you until your benefit payment arrives, regardless of the urgency of the outstanding bills. You will be surprised at how understanding creditors are if you simply explain the situation.
Get Some Help
In the end, if you need some assistance to make ends meet, get some help:
- From your local welfare group.
- In the form of an advance from the local jobcentre.
Get a Credit Union Loan
Check to see if your local credit union will offer you a loan being disabled if you’re not eligible for any government assistance. Credit unions usually offer lower rates and also provide members with financial advice and assistance.
Remember, you should be a member of that credit union, have an account, and show some savings over a few months to be eligible. That’s not always the case so it’s best to make inquiries.
Your Finances Going Forward
The simple fact of the matter is that if you need to borrow then you are living beyond your means. This is where your household budget management is most important.
Once you have listed all your expenses to the last dollar, you will know exactly where you stand and where the best opportunities are for you to save money.