Category: Budgeting Loans

What to Know about Budgeting Loans

If you’re in need of some extra cash, then you may find that it’s a better solution to apply for a budgeting loan, rather than simply paying the high interest charges that come from standard doorstep lenders. Alternatively, there may be other help available from various local authorities.

A budgeting loan is something that can be used for a collection of different expenses, including travelling, clothing, maternity, furniture, funeral expenses, and more. If you’re not getting universal credit, then there’s a chance that you can apply for a budgeting loan. However, in order to be successful, you will need to be receiving some manner of income-based jobseeker’s allowance, income support, pension credit, or employment and support allowance. Additionally, you will need to have been claiming your benefits for a period of at least 26 weeks with no break of more than 28 days.

Can you Get a Budgeting Loan?

As mentioned above, it’s only possible to get a budgeting loan if you are receiving pension credit, jobseeker’s allowance, employment and support allowance, or income support on the day that you apply for the loan. You will also need to be receiving your benefits on the day that a decision is made regarding your loan.

If you are claiming universal credit, you will only be able to get a budgeting loan if your earnings are less than £2,600 over the previous six months before you applied for the loan. The amount cap can go up to £3,600 in total for a couple applying for budgeting loans.

In the case of Universal credit, any time that is spent receiving some of the other benefits that are mentioned above, before the person moved onto universal credit, will count towards the amount of time that the individual must be receiving benefits before they can apply for a budget loan. Additionally, to help maintain all work incentives, the requirement will not apply if the expense that the budgeting advance is needed for is to keep or get employment.

Budgeting Loans Savings Limits

It will not be possible for any person to be given a full budgeting loan if they, or their partner has more than £1,000 in their savings. The amount can be enhanced to £2,000 for couples who are over 62 years of age. For a budgeting advance, the same rules regarding savings apply. A decision will be made on whether or not you can have a budgeting loan or advance by looking at your individual circumstances, any existing advances you owe, your savings, your ability to repay the loan, and more.

It’s also worth noting that there are three different rates that can be used to determine how much of a budgeting loan or advance you will be given. These rates depend on whether you are applying as a single person, a couple without children, or a person with children. If you are single, the maximum amount you can borrow is £348, if you are a couple, that amount increases to £464, and if you have children, the amount is £812.

The minimum amount of loan or advance that you can get is £100, and you will not be able to apply for more than you can reasonably afford to repay.
Remember, if you are given a budgeting advance or loan, you will need to pay back the money that you borrow, but you will not be required to pay back any interest on the loan. Usually, you’ll need to repay the full amount within two years, but most people repay within one year.

Benefit Caps and Budgeting Loans

A budgeting advance or loan is not included within the benefit cap, which is used to limit the total amount of certain benefits that people of working-age are eligible to receive. Your budgeting loan will be directly paid into your building society, bank account, or post office account through simple payments. Importantly, your budgeting advance or loan will not count as income, so it will not have an impact on the other benefits you can get.

When you are applying for a budgeting loan or advance, you will not need to say exactly what you want to purchase with the money, or why you want to buy it. However, you will need to give details as to the category that you want to use the expenses for, such as to maintain a job, etc. You will also need to state how much money you need.

You will need to give your national insurance number when applying for your budgeting loan or advance, and you will also have to give details of who else is living with you, including children and your partner. Information may be needed regarding your current debt and savings, and your application will be treated as if it was made on the same day it was received by the DWP. If your application wasn’t complete, your application will still be treat as though it was made on the day it was first received.