Interest-Free Budgeting Loans- Everything You Need To Know

Interest-Free Budgeting Loans- Everything You Need To Know

Interest-Free Budgeting Loans- Everything You Need To Know

The UK government is handing out a lot of benefits to citizens who’re either unemployed or on a very low income. Despite Universal Credit, you may still fall short of money to make ends meet. If this is so, you can now access interest-free budgeting loans. This is some extra money on top of your existing benefits that you can use to pay for essential day-to-day commodities. A budgeting advance is somewhat different, in that it’s a higher amount of Universal Credit (UC) helpful in paying for certain expenses. Budgeting loans are interest-free and from Social Funds.

 

What Are Budgeting Loans?

Budgeting loans are like a saviour in disguise for UK citizens on a low income or out of work. They’re like a normal loan and need to be paid back, but without any interest on it. Applicable to England, Scotland, Wales and Northern Ireland, you can use the money to pay for a wide range of goods and services such as:

  • Household equipment and furniture
  • Daily wear like clothing and footwear
  • Advance rent payment or expenses on moving house
  • Travelling expenses
  • Things that can help you get or start a job
  • Making improvements, maintaining and securing your home
  • Maternity and funeral expenses
  • To repay debts taken out in the previous months

 

More help for Maternity:
You might be able to gain a £500 SureStart maternity grant. While you don’t pay this back, you’ll have to repay budgeting loans if you borrow them for pregnancy-related costs like hospitalization and neonatal childcare. Eligibility depends on whether you’re expecting your first child or already have children.

 

More help for Funeral:
If you’re on benefits and have to pay funeral expenses for a family member or close friend, try applying for a Funeral Payment.

More help for Emergencies:
In the presence of a scheme in your area, you can apply for Local Welfare Assistance in the face of an emergency. These are discretionary and there are chances you might not get them as not every council has them. This isn’t the case with budgeting loans. You can use the vouchers for small essentials like food, clothing and fuel, as well as for big ones like a bed, cooker or fridge.

 

Can I Get Budgeting Loans?

One of the basic eligibility criteria for getting budgeting loans is that you should already be receiving state benefits in some form or the other. These loans are available if you currently claim any of the following:

  • Income Support
  • Pension Credit
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance

Other terms and conditions are: at least 26 consecutive weeks or with a break of no more than 28 days should have passed since you started claiming the above benefits. Your chances of securing much-sought-after budgeting loans can also be affected by:

  • Your circumstances
  • How much savings you have above £1,000 (£2,000 if you’re 63 and above)
  • Any existing budgeting loan you owe
  • Whether you can afford to pay back the loan

budgeting loans

How Much Money Can I Get As Budgeting Loans?

Budgeting loans start from a minimum amount of £100. There are three rates applicable depending on the level of support you are in need of. Typically, higher amounts are available to parents with children rather than singles or couples. Take a look at the maximum borrowing limits:

  • £348 if you’re unmarried
  • £464 if you live with your spouse/ civil partner
  • £812 for one/two parents with kids

Remember that you won’t get a loan amount you can’t afford to pay back.

 

How Do I Apply For Budgeting Loans?

Applying for budgeting loans is very easy. You can do either of the following:

 

What Documents Do I Need To Claim Budgeting Loans?

For claiming budgeting loans, having a national insurance number is a must. You’ll also have to say about who your dependents (partner or children) and existing savings and debts.

 

How Soon Will I Get Budgeting Loans?

On the date the DWP receives your application, it is treated as if it was made on that date. In case your budgeting loans application had some information missing and you provided the details accordingly, there won’t be a delay in processing. It usually takes around 5 to 6 weeks for a claim to be processed.

 

How Will I Be Paid Budgeting Loans?

If you have a Bank, Building Society or Post Office account on your name, the money will go directly into this account. If you’re unable to open or manage any of these accounts, a simple payment will happen.

 

How Do I Repay Budgeting Loans?

A cherry on the cake is that budgeting loans carry zero interest, so you’ll just the amount you borrowed. You agree to make loan repayments within two years. Note that the repayments come out of your benefits. So if benefits suddenly stop, you might have to look for another means for paying budgeting loans back. If you still can’t manage loan repayments, request the office that sanctioned your loan for a change in repayment plans. Don’t get yourself deeper into debt while paying back budgeting loans.

 

How Do I Challenge A Budgeting Loan Decision Which Isn’t In My Favour?

If a decision made against your budgeting loans application doesn’t turn out in your favour, you can always write to the Jobcentre Plus within 28 days requesting a review. However, you should explain why you think you qualify for this interest-free loan. If you’re not satisfied with the review, ask the office of the Independent Case Examiner to review within 21 days. Thinking of help from a financial advisor for challenging a decision? Go online and locate one in your area.

 

Is A Budgeting Advance Different From Budgeting Loans?

A Budgeting Advance is the equivalent of a budgeting loan for those who claim Universal Credit. Here too, you must satisfy the eligibility criteria:

  • Should be receiving UC from six months- unless you’re using this money to look for work or keep the current job
  • Earned less than £2,600 if you’re single and £3,600 if you’re a couple in the span of last six months
  • Not owe another Budgeting Advance

Budgeting advance payments are deducted from your UC and may go on till 12 months.

 

Budgeting Loans- Summary

  • They’re interest-free loans that can assist in purchasing daily essentials like food, clothing, and fuel.
  • You need to repay them but without interest within 2 years.
  • To be eligible, you need to be claiming any of Pension Credit, Income Support, JSA or ESA.
  • Your financial circumstances, savings, existing budgeting loans and affordability are looked at.
  • You can get a form at the local Jobcentre or download and print the online form.
  • Your national insurance number is required.
  • It would take upto 6 weeks to get budgeting loans in your bank, building society or post office account.

 

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