What Are Budgeting Loans?

If you think that you might need help with certain expenses in your life, or you’re struggling to make ends meet when it comes to paying the everyday bills, then you may be looking for solution. Many people find that they simply don’t have people in their lives that they can turn to for extra help when the going gets tough, which means that they need to think about loans instead.

If you think that you may be in need of a loan, it might be worth seeing whether you can apply for a budgeting loan, instead of potentially having to pay huge amounts of interest because you need to borrow from doorstep lenders or payday loans. Alternatively, you might also find that you can get access to different forms of assistance and financial benefits depending on where you live and what your circumstances look like.

Defining a Budgeting Loan

For many people, the term “budgeting loan” isn’t a very common one. In fact, these types of loan aren’t considered very often at all, and there is not a great deal of information about them online. However, budgeting loans can be very beneficial for a range of reasons. For example, a budgeting loan can help you overcome concerns regarding a wide selection of expenses, including clothing or footwear, household equipment or furniture, removal expenses, and even travelling expenses. Some budgeting loans can also be applied to circumstances that will help you to start or look for work, or maintain something in your home.

Budgeting loans are designed for people who are in a situation wherein they need access to finances as quickly as possible – without having to place themselves in serious amounts of debt. Sometimes, you might consider a budgeting loan if you need to pay funeral or maternity expenses, or repay the purchase of various other debts you owe.

Who Can Get Budgeting Loans?

Unfortunately, budgeting loans aren’t necessarily available for everyone. In fact, many people will not be able to access this unique form of credit. In order to apply for a budgeting loan, you will need to be receiving either income support, jobseeker allowance based on your income, employment and support allowance based on your income, or pension credit.

Other things may affect the amount of loan you are eligible to receive too, such as having a set of pre-existing social funds, or savings that reach more than £1,000. You will need to discuss your eligibility in depth with your local government or loan providers to find out more.

The Process of Paying Back Budgeting Loans

One of the most appealing things about a budgeting loan is that the repayments are completely interest free, and they can be worked out for you at the time that your loan is agreed upon. Instead of having to worry about making sure that you can afford to meet the repayments every month, with a budgeting loan the amount you owe is generally taken out of your benefits. This means that if you are not receiving any benefits and you are still able to get a budgeting loan you will need to come up with a different solution for paying the money you borrow back. If you have a loan and you can no longer afford to make the repayments and continue making payments for food and bills, then you will need to speak to the office that gave you the loan in the first place.

If you are claiming Universal Credit, then you may also be able to claim a budgeting advance, and there are various local authorities throughout the UK and the development governments of Wales and Scotland that can help you to access additional support if you are in an emergency situation.

In many locations, you will find that there are financial assistance bureaus and locations where you can schedule an appointment to discuss the options that might be available to you if you are in desperate need of some help. These locations will be able to not only discuss which benefits might be available to you, but could also help you understand more about budgeting loans, loans in general, and how you can manage your money more effectively in the future.
Budgeting loans can be an ideal solution for people who have nowhere else to turn for the finances that they need, but want to make sure that they don’t end up paying off their debts for a number of years. Without any interest to worry about, the concern of taking out a loan can be greatly reduced and you may be able to gain access to the cash that you need without putting yourself in a difficult living position – which is what can happen for people who rely on payday loans or high interest borrowing schemes.


How Much Debt Should you pay off Each Month?

This is quite a difficult question to answer and could be different from person to person, but it is one that you should really think about if you are in debt. You should not be thinking about whether to pay your debt off or not, but concentrating on how much you can afford each month. It could just be a small amount, but every bit is better than none at all.

It is wise to be open minded about this. You will find that there are some months when you can afford to pay off more debt than other months and so you should not get one figure stuck in your head. However, you should have a minimum amount in mind and then top that up if you have money left over. It will mean that you have to have good self-discipline to make sure that you do make payments each month and that is not always that easy for everyone. However, if you really want to get rid of the debt, then this will be a big help.

It is important to make sure that you tackle the most expensive debt first. This is not the one that owe the most to but the one with the highest charges and interest rates. If you can get rid of that, then you will free up a lot of money that you can use to pay off the other debts as you will not be paying those high fees anymore.

It is a really good idea to set up a direct debit to pay some off each month. This should be more than the minimum requirement so that you are not only paying off the interest but also some of the debt as well. To calculate how much to pay you will need to look carefully at your finances. You will need to look at bank statements and see how much money comes in each month and then how much goes out on necessities. See how much is left to pay off the loan. If there is not much or none left then you will need to see whether you can cut back your spending anywhere or if you can earn more money or else you will be borrowing more and more money each month.

You may rather wait and see how much money you have left at the end of the month and use that to pay towards the debt. The problem with this approach is that we tend to spend what money is available and there could be nothing left. It is better to spend it first on the debt and then you will not be able to spend it on other things.

You can still pay whatever is left off towards the debt, but this amount may vary month to month and whether there is anything at all will depend on your level of pay and costs as well as how well disciplined you are at budgeting. It is wise to try to budget and therefore free up some money each month to pay extra off, but it is not always easy. However, setting yourself the challenge to cut down on spending for luxury items could really help. If you cut out a few things, it could make quite a big difference.

You may worry that if you put all of your spare money into paying off your debt you could get into trouble if you need some extra money. However, it is usually wise to pay off as much as possible because debt is really expensive. If you find you need a bit extra you can borrow a bit more, but you will have saved money in the meantime. You should try to budget well anyway and therefore there should be no reason why you will suddenly find you need to find some extra money.

It can be wise to try to earn some extra money while trying to pay off debts. This can help them to be paid off even more quickly and means that you may not have to cut your spending quite so much to do so, if you do not want to. There are various ways that you could try to earn more such as working extra hours, doing some freelance work, selling things or something else. There are many ways to generate a bit more income, particularly online and so it can be worth doing a bit of research and having a go, if you have the time. You may then be able to pay this money off the debt and you could soon find that it is all paid off. You could always keep going with the extra earning and you will then be able to build up some savings or treat yourself to something nice.


Is there an Optimum age for getting a Loan?

When taking out a loan, there are many things that we should consider. We need to think about the cost, our income and how well we will be able to pay it off. One thing that may occur to you is whether there is a good age to be when you are applying for a loan.

Obviously you will need to be eighteen years old in most cases before you can apply for a loan, but after this age, is there one age that it is best to borrow at. It is worth considering things that happen at different ages to ponder the answer to this question.

When we are younger, we have less financial commitments. We are less likely to have a family to look after and less likely to have our own home and so our outgoings will be less. As we get older we may meet someone else and have two incomes in a household, which could be better but there may be a mortgage to pay. Having children will increase costs and these will continue to rise each year until the children get a job. Once they leave home, you will be older and potentially less employable, this means that if you lose your job, you may find it more difficult to get another one. As you reach retirement age you are unlikely to be allowed a loan, even if you have a good pension income.

With regards to income, you are likely to get an increase as you get older. This means that potentially you will have more money to pay off the loans, but as explained above, you will probably have more expenses as well. This may mean that the amount of available money you have, could potentially stay about the same unless you do not have children or until they start earning money.

Borrowing at a young age can start a trend that you continue for the rest of your life. It may seem good to be able to get some extra money and buy extra things but it is a really expensive way of buying things. If you add on the cost of the borrowing to the items that you buy, then most of them will be so much more expensive that you would not have bought them if that was the ticketed price. You could start to from a habit of borrowing money to buy extra things that you need and this is not a good habit to start. It is much better financially if you save up for things and buy them like that. It is not always easy, but it can make a huge financial difference.

If you take on a loan and then find that you have children, then you may regret it. Those loan repayments may start to become a big chore, particularly when expenses go up and perhaps one income stream is lost. It is not always easy to predict when children might arrive, but making sure that you do not have debts before they do, can be a really wise thing. Therefore it is best not to borrow money before you have children.

Once the children are earning themselves, you may find that you are a lot better off. They may be contributing to the household income and everyone can go to work if they want to as there will be no childcare necessary. This means that it could be thought to be a better time to borrow money. There may though be some loans that are no longer available to you. You may find that as you are closer to retirement age then lenders will not be so happy to let you have a loan. It is also wise to consider that there is more risk that you may be unwell and unable to work and this could means that you will not be able to easily make the loan repayments and this could cause a lot of problems and worry.

As you reach retirement you are less likely to be able to borrow money. Most pensioners find that their income is reduced anyway. Although they tend to have less costs as their children are usually less reliant on them, a pension income tends to be smaller than a salary and therefore there is not spare money to pay for repayments on a loan.

So it seems that there probably is never a good age to get a loan. Therefore it is always important to try to think about the future and how your life may change with regards to income and expenses when you are considering borrowing money. It is not always easy to predict what might happen, but always try to imagine whether you could cope with repayments if your income goes down or costs go up and decide whether you will be able to afford the repayments.