DWP zero-interest loans up to £812 can now be paid back over two years

Universal Credit claimants taking out a Budgeting Advance Loan of up to £812 will now have 24 months to repay the full amount, following a change made by the Department for Work and Pensions (DWP). This extension from the previous 12-month repayment period is designed to ease financial pressure by allowing smaller repayments over a longer time.

In addition, those on other DWP benefits may be eligible for a Budgeting Loan to help cover the cost of essential items or services that they otherwise couldn't afford. Before considering these loans, it's recommended to check with your local council for potential financial assistance or unclaimed support.

Eligibility for the loan extends to those who have been claiming Income Support, Income-based Jobseeker's Allowance, Income-related Employment and Support Allowance or Pension Credit for at least six months. The loan is repaid through deductions from their benefits, reports the Daily Record.

READ MORE: Asda shoppers told to buy 14p item to get extra £5 to spend in store

For older claimants transitioning from Universal Credit to Pension Credit, the DWP will include the time spent receiving Universal Credit towards the six-month requirement.

The DWP has published easy-to-understand online guidance to simplify the process, including eligibility criteria, acceptable uses for the loan, and repayment methods.

What is a Budgeting Loan?

A Budgeting Loan is a financial aid provided by the Department for Work and Pensions (DWP) to individuals who have been claiming certain benefits for at least six months. However, it's crucial to remember that this is a loan and must be repaid through benefit payments.

Who cannot apply for a Budgeting Loan?

If you currently get Universal Credit, you cannot get a Budgeting Loan. Apply for a Budgeting Advance instead - full details on GOV.UK here.

You also cannot get a Budgeting Loan if:

• you get New Style Jobseeker’s Allowance or New Style Employment and Support Allowance

• you are involved in industrial action (for example a strike, walkout or lockout)

• you owe more than £1,500 in total for Crisis Loans and Budgeting Loans

Find out more about eligibility on GOV.UK here.

What can a Budgeting Loan be used for?

The loan is to help pay for essential things or services.

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 much you could get

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)

• Are paying back an existing Budgeting Loan or Crisis Loan

Paying the Budgeting Loan back

The money is paid back in full to the DWP at 0% interest within two years. When the DWP pays your benefit, it will take an amount off to help pay your loan off.

The amount taken depends on your total income, which includes any benefits you get and what you can afford. If you stop getting benefits, the rest 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 from your benefits and if you accept, your weekly repayments from your benefit will start straight away.

How to apply

You can apply for a Budgeting Loan online or by post, however, the DWP guidance states: “You will get a quicker decision on your Budgeting Loan by applying online.”

What happens after an application is made?

The DWP will either send you an email, text or letter letting you know whether or not you can get a Budgeting Loan - you must request which method of notification when you apply.

But it’s worth noting if you requested a decision by email or text message, you will get this within seven days. If you asked for a decision by letter, it will be sent within 21 days.

How to accept a loan

If you can get a Budgeting Loan, you need to ‘accept’ the decision before you get the money.

How you ‘accept’ your decision depends on how you applied:

• If you applied online, you will get a text message or email telling you what to do

• If you applied by post, you can accept the decision by letter