What's in this guide?
- How does a budgeting advance loan work?
- How to apply for a universal credit budgeting advance?
- Am I eligible for a universal credit budgeting advance?
- What can I use a universal credit budgeting advance for?
- How do I repay a universal credit budgeting advance?
- What are my other options?
- The bottom line
- Frequently asked questions
A universal credit budgeting advance is an interest-free loan designed to help universal credit claimants pay for one-off or unforeseen expenses. Learn about how much you can borrow and compare your other options with our guide.
How does a budgeting advance loan work?
If you’re on universal credit or other benefits and need to cover a large upcoming expense, you can choose to receive some of your benefit upfront as a loan. The loan will then be repaid over the next 12 months through your regular universal credit payments, which means you’ll receive a lower monthly payment until the loan amount has been paid off.
How much can I borrow?
The minimum amount you can claim on a budgeting advance loan is £100. The maximum amount depends on your personal circumstances and how much money you have in savings.
- For singles without dependent children, it’s £348
- For couples without dependent children, it’s £464
- For those with dependent children, it’s £812
However, if you have more than £1,000 in savings, the amount you can borrow will be the figure above less whatever savings you have above £1,000. For example, if you’re a single person without any dependent children and you have £1,100 in savings, the maximum you can borrow is reduced to £248 (£348 minus £100).
How to apply for a universal credit budgeting advance?
You can apply for a universal credit budgeting advance online, by calling the universal credit helpline or by contacting your local Jobcentre Plus work coach.
You’ll need to prove that you have a valid need for the loan, and that you’ll be able to pay it back.
Am I eligible for a universal credit budgeting advance?
The loan isn’t only available for universal credit claimants. You may be eligible for the loan if you’ve claimed any of the following benefits in the last six months:
- Universal credit
- Jobseeker’s allowance (income-based)
- Employment and support allowance (income-related)
- Income support
- Pension credit
You must have earned less than £2,600 in the past six months (or £3,600 if you’re part of a couple) in order to be eligible for a loan.
However, it’s likely that you’ll be refused a budgeting advance if it appears that you may be unable to pay it back.
If you’ve claimed a budgeting advance in the past, you must have paid it back before you can claim another one.
If you’re struggling to meet essential expenses like rent or food while waiting for your first UC payment, you can ask for a universal credit advance instead. This is a different interest-free loan, although it’s also paid back via deductions from future UC payments.
What can I use a universal credit budgeting advance for?
A universal credit budgeting advance will only be approved if it’s being used for essential one-off expenses or charges, such as:
- Essential household items such as cookers, fridges or beds
- Unexpected bills or a fine
- Rent in advance
- Removal costs if moving home
- One-off expenses required for your job, such as uniform or equipment
- Home repairs or essential improvements
You’ll be asked what you’re planning to spend the money on. If you’re trying to claim a budgeting advance for ongoing costs (like food, travel or childcare) or one-off luxury purchases (like a new TV or event tickets), your claim will be denied.
How do I repay a universal credit budgeting advance?
Repayments will be automatically deducted from future universal credit payments. These deductions will usually be spread across your next 12 universal credit payments and you can request that your payments not start for three months in exceptional circumstances.
If you no longer receive universal credit, you’ll still need to pay off the budgeting advance loan amount.
What are my other options?
If you’re struggling to afford rent, you could explore whether you’re eligible for a discretionary housing payment. This is another benefit available to those who are claiming housing benefits.
Benefit claimants are likely to have limited options when it comes to claiming loans. You may be eligible for a credit-builder credit card or a payday loan, but these have higher interest rates attached to them and could cause more problems than they solve. A payday loan should be your last resort for borrowing money. Only apply if you can afford to make the repayments on time.
If you’re in extreme financial hardship, you may be eligible for financial assistance from your local council.
If you’re really struggling for ideas to cover an unexpected expense, consider seeking debt advice from an independent body, such as the Money Advice Service.
The bottom line
A universal credit budgeting advance is a useful option that could get universal credit claimants out of a sticky financial situation. Although the loan is interest-free, remember that it will reduce your benefits for the next 12 months, so it should only be claimed if you can get by with a reduced benefit payment.
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