Personal and consumer loans for unemployed people in the United Kingdom

Start with what you actually need to borrow

Before comparing lenders, put a figure on the need and on what you can repay each week or month from the money you are certain to receive. Borrowing a little less than you are offered is almost always cheaper and safer.

If the purchase is for something essential, such as a cooker or bedding, check first whether a grant, a local welfare scheme or a benefit advance could cover it. Those routes cost less than any commercial loan, and the Jobcentre or your local council can point you towards them.

Use a simple test before you apply: write down the amount, the term and the repayment, then ask whether you could still pay it if your income fell by a fifth for a few months. If the answer is no, reduce the amount or look at a different route.

What a mainstream lender will look for

Banks and building societies offer personal loans with fixed repayments, which MoneyHelper describes as typically up to £50,000 over up to five years. The actual rate is often not known until you apply and are assessed.

Those lenders mainly want steady income, a clean enough credit record and an affordable budget. Someone with no wage, or with benefits only, is less likely to be accepted, so check any eligibility tool before a full application, since a refused application can still be recorded on your file.

Credit unions: borrowing from a local co-operative

Credit unions are owned by their members and lend mostly to people in a defined area or group. They tend to look at your whole situation rather than a score alone, and some offer small, short loans to members on low incomes.

To find one you may be able to join, use the national finder, which covers hundreds of unions and searches by postcode, workplace or association. Ask each one how it treats benefit income and whether a savings period applies before a loan is released.

Not-for-profit lenders for household goods

Fair for You is a regulated lender owned by a charity. It lets customers buy items such as appliances, furniture and technology from partner retailers and repay over terms from twelve to fifty-two weeks, weekly, fortnightly, four-weekly or monthly. It says no deposit is needed.

It publishes a loan calculator so you can see the repayment before committing. As always, compare the total repayable with other routes, including saving up or a credit union loan, and check the eligibility steps on its own site.

Questions to ask any lender

Is the lender authorised by the Financial Conduct Authority? What is the APR, and is it fixed? What happens if I pay early, or fall behind? Are there any fees on top of interest? Written answers are better than a verbal promise.

Comparing costs fairly

Look at the APR and, more importantly, the total amount you will pay back. A longer term lowers each instalment but usually raises the total cost. Insurance sold with the loan, such as payment protection, is optional and should be priced separately.

A simple illustration: if two offers each have repayments you can afford, the one with the smaller total repayable and no early-settlement penalty is generally better, even if the monthly figure is slightly higher.

Offers to walk away from

Be cautious of lenders who push quick cash with very high rates, who bundle in extras you did not request, or who ask you to pay a fee before the money arrives. Such advance-fee demands are a classic sign of a scam.

Cold calls, texts or social media messages offering guaranteed approval are not how regulated lenders behave. Check the firm on the Financial Services Register before sharing any details.

If repayments are already a struggle

Taking a new loan to pay old ones can deepen the problem. Free, independent debt advice from a charity such as StepChange can look at your whole budget and tell you which options, if any, fit your position.

Citizens Advice also explains how lenders decide, how to cancel a credit agreement within the cooling-off period and what to do if you cannot pay. Contact them before arrears build up.