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If you’re on benefits and need more financial support, you could be wondering what benefit loans might be available. Being eligible to borrow money may not seem possible when you’re receiving support from the state, but there are a few options that you can consider, including whether you qualify for government schemes such as Personal Independence Payment (PIP – sometimes people call these "PIP loans DWP" but they’re actually a form of benefit) and Budgeting Loans.
Loans for people on benefits are generally harder to come by from traditional banks and lenders, because they need to see if you can comfortably afford to repay what you borrow. If you don’t have a steady income from employment and mainly rely on benefits to live on, you may be viewed by lenders as high-risk when they assess your eligibility. Likewise, if you have a bad credit history, this too can impact your chances of qualifying for a loan.
Don’t be disheartened, though. There are some specialist lenders that will consider people trying to apply for loans on benefits and need the money instantly. Just keep in mind that if you’re a high-risk borrower, the options available to you will likely come with higher interest rates, which will make your loan much more expensive overall.
This will depend on the lender, their terms and conditions and your individual circumstances. During your search you may come across payday loans for benefits claimants, loans for disabled people, loans for carers and even loans for low income applicants. Just remember that these loans could come with strict repayment rules and costly additional charges, more so if you have a poor credit rating and are considered a risky borrower.
Yes, you do! We mentioned Personal Independence Payment (PIP) earlier, a UK government scheme to help with extra living costs. If you have a long-term physical or mental health condition or disability and find it difficult to perform everyday tasks or get around because of your condition, you may be eligible. Even if you’re employed or working, have savings or are claiming other benefits, you can still qualify for PIP, so it’s worth enquiring about, if you feel you could be eligible.
Another alternative could be an interest-free budgeting loan, also provided by the UK government. If you’ve been searching for loans for people on universal credit, PIP loans and grants, or other benefits, this might be an option for you. Budgeting loans can help pay for things like furniture, clothes, rent in advance or even funeral costs – but you’ll have to repay what you borrow usually within two years.
Credit unions offer loans too, though you’ll have to be an eligible member. Plus, they tend to provide smaller sums of money than other lenders, so think carefully if this will suit your needs.
This will depend on a range of factors that extend beyond your sources of income and what your credit history is like. If you’re applying for a loan with us, we’ll keep in mind your overall financial situation and your ability to repay the loan when assessing your eligibility. Our standard eligibility criteria includes being 18 years or over, having a regular income and not having any CCJs or reported bankruptcies*. You can check your eligibility to see if you qualify right now.
Even if you’re not yet eligible, we can help you strengthen your financial resilience with our free membership. You’ll have access to free tools to help you understand your finances better, exclusive offers from our specially selected partners and our handy Benefits Finder to unlock any benefits you may be entitled to – you could discover up to £895 per month**!
*This list is not extensive
** Correct as at March 2024
This will vary from lender to lender, whether you’re claiming PIP or any other type of benefit. Some lenders may view your benefits as a source of income, which may boost your eligibility for a loan. However, you should think very carefully about whether you can afford to take out a loan in the first place when benefits are your only income.
There are a number of organisations that can provide free support and guidance when you’re having financial difficulties, such as paying your rent or household bills. Places like Citizens Advice or Money Helper provide lots of helpful tools that can help you take back control of your money. The important thing is not to struggle on alone, so always seek help, because the chances are you could discover solutions you hadn’t thought of before.
It may be possible to find a loan if you claim Universal Credit, but it may be provided by a lender specialising in benefit loans. This means their terms will typically be very strict and any associated interest rates and fees could be very high, so consider them with caution, especially if you’re worried about being able to afford the repayments. As we said earlier, always ensure you understand the lender’s conditions of any potential loan and remember that these can vary significantly from lender to lender.
This will depend on each lender’s individual eligibility criteria and loan terms, and you may only find options from specialist loan providers rather than traditional High Street banks.
The amount you can borrow from any lender – if you’re eligible and can comfortably afford to repay the loan – will depend on several factors. These can include the type of benefits you receive, your overall financial situation and the specific terms of the lender you’re considering. But remember, this list isn’t extensive, and you should only ever take out a loan, or any type of credit, if you can afford to pay it back.