Should you borrow with an uncertain income?

Thursday, 30/04/2015

Changing working practices and lifestyles have resulted in a large number of people being unable to accurately predict their income on a weekly or monthly basis. Zero hour contracts or being self-employed can all result in pay fluctuating wildly. Budgeting in these circumstances can be a challenge, made even more demanding if you’ve got loan repayments to make. With this in mind, is borrowing when you’re not sure of your income ever appropriate? If so, what might be the best form of finance to use? Take a look at some useful pointers for getting credit that meets your needs.

Flexible repayments work well

If funds can vary from week to week, it may be worth considering forms of finance where it’s possible to make frequent, piecemeal payments rather than one larger instalment less often. In this situation, credit cards or an overdraft may be preferable, provided you are confident that minimum repayments can be made on time.

Average your earnings

When you’re having a “good” week, it makes sense to put aside what you can for when you’ve got less coming in. Many people on variable incomes find they can budget using average income figures then carry funds over from one week to the next, resulting in a fairly constant amount of available cash. If you’re able to do this regularly, it’s likely you’ll be able to service instalment loans or other forms of credit where prompt repayment is vital.

Spread bills

When you don’t have a regular monthly salary, it’s often easier to spread direct debits across the whole month, rather than concentrating them at the beginning or the end. Many people find it more straight-forward to pay a bill or two a week, rather than suddenly having to find a larger amount every four weeks or so.

Use the tips above to help keep your budget on an even keel and maximise your chances of timely repayment if you’ve had to take out credit to pay for an essential purchase. Try not to borrow unless you’re certain that you will be able to make the necessary repayments.


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Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk