Budgeting loans offered by DWP Budgeting Loans are interest-free loans designed to help cover essential costs. Payments will be automatically deducted from your benefits, with up to two years (104 weeks) given for repaying it.
If you are receiving universal credit, but cannot access a DWP Budgeting Loan, the option of applying for a Budgeting Advance might be better suited to you. We will explain how it works and the steps necessary for applying.
What is a budgeting loan?
Budgeting loans from the Department for Work and Pensions provide interest-free credit that can help individuals cover one-off costs without breaking their budgets. Similar to crisis loans, budgeting loans exist as an interim solution until this type of assistance can be reinstated on Universal Credit.
If you need a budgeting loan, the best way to apply for one is through your jobcentre work coach. They will discuss your individual circumstances with you before determining how much of a loan they can approve for.
Budgeting loans will be deducted automatically from your Universal Credit payments and their repayment will depend on several factors, including your ability and savings available to repay it.
Who is eligible for a budgeting loan?
People receiving income-related benefits such as Universal Credit may be eligible for a budgeting loan; however, certain criteria must first be fulfilled.
One of the key requirements is receiving benefits for at least six months before taking out a budgeting loan, and continuing to receive them during repayment of said loan.
Budgeting loans may only be taken out every two years and their total amount will be deducted automatically from your benefits. Payment must be completed in no more than 104 weeks or two years; you can request to have your budgeting loan decision reviewed within 28 days of its initial decision.
How does a budgeting loan work?
Budgeting loans are interest free loans designed to assist with costs such as furniture or essential household equipment purchases, clothing/footwear purchases and home improvements. You can apply for one either online or by phone.
Budget loans typically take five to six weeks for approval and disbursement, although this time frame may change based on department workload. Staying on top of your application by regularly following up with authorities may speed up this process.
Remember to remember that any budgeting loan requires repayment and will have its repayments automatically deducted from your benefits. Repayment should usually take no more than two years; if receiving Universal Credit instead, use Budgeting Advances instead.
How often can I apply for a budgeting loan?
One budgeting loan application per six-month period may be submitted, and its amount determined by the Department for Work and Pensions. Repayments are taken automatically from benefits payments over two years (104 weeks).
Budget loans can help pay for items like furniture or essential household items, clothing or footwear costs associated with moving house, funeral expenses and hire-purchase debts.
If you disagree with a decision regarding your budgeting loan, you may ask for it to be reconsidered. In such instances, writing and sending a letter explaining why it was made will allow them to reconsider it. This letter must then be sent directly to the address noted on your letter of decision.
How do I pay back a budgeting loan?
Budgeting loans (known as Budgeting Advances in Universal Credit terms) provide an interest-free means of borrowing money when needed. Your repayment amount will be determined when agreeing on a budgeting loan and often taken automatically from your benefit payments.
The Department for Work and Pensions determines how much budgeting loan or advance you can receive, providing only what it believes you can repay within two years. Repayment should never exceed what was approved.
If you believe the decision was incorrect, you can request a review by drafting and mailing a letter explaining why the decision is inappropriate to the address listed on your decision letter within 28 days.