If you are unable to afford basics such as clothes and furniture or you’ve been hit by an unexpected expense like a funeral or moving, you may be eligible for a loan.
This can be in form of an advance on your benefits or a traditional loan that you have to repay within a specified period.
Here are some of the loan options available to you depending on your situation.
Benefit Advances
If you need to cover some urgent expenses before your first benefit payment arrives, you can apply for an advance.
This applies if you are eligible and had applied for Universal Credit, Carer’s Allowance, State Pension, Pension Credit, Jobseeker’s Allowance, Employment and Support Allowance or Income Support.
To apply, call the appropriate benefits office.
If you are eligible for an advance, it will be paid into your Post Office or Bank account that same day or the next working day.
The advance is interest-free. A little bit will be deducted from your future monthly benefit payments until you’ve paid it back in full.
Budgeting Loan
If you need financial help to pay for specific expenses, check if you qualify for a budgeting loan.
You can use it to pay for furniture, funeral expenses, rent, home improvement, clothes and even repaying other loans.
To receive a budgeting loan you must have been receiving income support, jobseeker’s allowance, employment and support allowance or pension credit for at least six months.
If you are receiving Universal Credit, see below for information on applying for a budgeting advance.
You can apply for a budgeting loan online or by filling out form SF500.
Like a benefit advance, a budgeting loan is interest-free and will be deducted from your benefit payments.
Deductions are planned in such a way that you’ll have paid back the loan in 2 years.
Budgeting Advance
A budgeting advance is for those who receive Universal Credit hence they are not eligible for a budgeting loan.
You can also apply for a budgeting advance if you receive Employment and Support Allowance, Jobseeker’s Allowance or State Pension Credit.
You must have been receiving a benefit for at least six months.
Another requirement is that you must have earned less than £2,600 for individuals and £3,600 for couples.
Once you receive the loan, the repayment process works the same way as a Budgeting Loan.
Funeral Payments
You can get help covering funeral expenses if you receive any of the following benefits:
- Income Support
- Universal Credit
- Employment and Support Allowance
- Jobseeker’s Allowance
- Pension Credit
- Housing Benefit
- Child Tax Credit
- Working Tax Credit for disability
In addition, the deceased person must have been your partner, a close relative, a close friend or a child under 16 whom you were responsible for.
You may still be eligible for the benefit even if the funeral will not be held in the UK as long it is within the European Economic Area or in Switzerland.
The amount you’ll receive depends on your particular circumstances and whether there are other ways you can cover the funeral costs.
For instance if your partner or relative had a pre-paid funeral plan, you can only claim up to £120. There are also limits to how much you’ll receive if they had an insurance policy.
Banks and Credit Unions
Most banks and local credit unions have specific lending policies for older borrowers.
They might offer lower interest rates and may be willing to consider your pension income when assessing your eligibility. Dividends and rental income may also count towards your eligibility.
If you cannot get an unsecured personal loan, you’ll have to provide an asset such as your home as security for a loan.
Other bank financing options include mortgaging, credit card and car-based financing.
But be careful with these type of loans since it’s easy to get into debt. Do not borrow more than you need and make sure you can afford the repayments.
