People are being told they could be eligible for a temporary loan to help them if they are struggling to pay their bills. The Department for Work and Pensions (DWP) has revealed some benefits claimants are eligible for a budgeting loan or advance to help with essential purchases in the ongoing cost of living crisis.
The type of loan and how you apply will depend on which benefits you claim, reports the Daily Record. The money can be used for household essentials or costs you are struggling to pay such as rent being paid in advance.
However there are certain conditions attached including that you must pay back the loan within two years. Here is everything you need to know about the budgeting loan and budgeting advance including how you qualify, how much you get and how to apply. To get all the latest money-saving news straight to your inbox sign up here.
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What is a budgeting loan?
A budgeting loan is given to people who have been claiming certain benefits for at least six months to help pay for essentials you are struggling to afford.
This might include:
- Furniture in your home
- Household white goods such as a washing machine, cooker, hoover or fridge
- Clothing or footwear
- Rent you have to pay in advance
- Any moving house costs such as a removal van
- Essential work needed on your home, including maintenance
- Security for your home, such as new keys or locks
- Some travelling costs in the UK
- Things that will help you get a new job, such as a suit for interviews or taxi fares to get to an interview
- Costs due to pregnancy and childbirth
- Costs for a funeral
How do I know if I am eligible?
The following benefits are eligible for the budgeting loan:
- Income support
- Income-based jobseeker’s allowance
- Income-related employment and support allowance
- Pension credit
If you're claiming universal credit you are not eligible for a budgeting loan, but you might be eligible for a budgeting advance.
What is a budgeting advance?
A budgeting advance is a payment universal credit claimants can get to help with emergency household costs such as replacing a broken cooker, getting a job, or staying in work or funeral costs.
Budgeting advances must be repaid through your regular universal credit payments and these will be lower until you pay it back. If you stop getting universal credit, you’ll have to repay the money in another way.
To get a budgeting advance all of the following must apply:
- you’ve been getting universal credit for six months or more unless you need the money to help you start a new job or stay in work
- you’ve earned less than £2,600 (£3,600 together for couples) in the past six months
- you’ve paid off any previous budgeting advance loans
You can read more about the budgeting advance here.
How much will I get?
With both the budgeting loan or budgeting advance, the lowest amount you can borrow is £100. You could get up to:
- £348 if you’re single
- £464 if you have a partner
- £812 if you or your partner claim child benefit
How much you could get depends on whether you can pay the loan back; have savings of more than £1,000 (£2,000 if you or your partner are 63 or over); or are paying back an existing budgeting loan or crisis loan.
Do I have to pay it back?
Yes - the budgeting loan is, as the name suggests, a temporary loan, so it must be paid back through benefit payments. The money is repaid to the DWP at 0% interest within two years. When the DWP pays your benefit, it will take a sum off to help repay your loan. This is the same with a budgeting advance.
The amount taken depends on your income, which includes any benefits you get and what you can afford. If you stop getting benefits, the remainder of your budgeting loan must still be repaid. If you can get a loan, the DWP will also tell you how much your weekly repayments will be and if you accept, your weekly repayments will start immediately.
How do I apply?
You can apply for a budgeting loan online here. You can apply by post, but you'll get a decision quicker if you apply online. If you request a decision by email or text message, you will get this within seven days. If you ask for a decision by letter, it will be sent within 21 days. For a budgeting advance you will need to contact your local Jobcentre Plus work coach.
When will I receive my money?
If you accepted the loan offer online, you will get your money within seven days. If you accepted by post, you will get your money within 21 days. If you gave the DWP your mobile phone number, they will send you a text message when they pay the money into your account. To find out more about applying for a budgeting loan by post or how to appeal a decision, visit the GOV.UK website here.
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