Loans for People on Benefits


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Can I Get A Loan While on Benefits?

If you receive assistance, you might be able to secure a loan. The good news is that some lenders are willing to view certain benefits as a source of regular income in certain circumstances. As a result, many persons who receive benefits may be qualified for a loan based on various personal circumstances. In addition, long-term benefit recipients, such as those receiving Disability Living Allowance, are likely to be approved for different types of loans than those receiving short-term or temporary benefits. Other lenders will cater to these loans for people on benefits.

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Which Benefits Count as Income?

The type of benefits you receive may have an impact on your ability to obtain a loan. For instance, some lenders only accept applications from people who receive long-term benefits, while others may look at a broader spectrum of benefits.

Disability Living Allowance

Disability Living Allowance or DLA is a tax-free benefit for disabled persons who require assistance with mobility or care expenditures. However note that for those aged 16 to State Pension age, Personal Independence Payment (PIP) has replaced DLA.

Employment and Support Allowance

People who are not able to work because of any kind of illness or disability but do not get Statutory Sick Pay are eligible for Employment and Support Allowance (ESA).

Working Tax Credit

Working Tax Credit is money given to low-income workers to help them earn more money. It makes no difference whether they work for someone else or are self-employed. However, it is now being replaced by Universal Credit.

Child Tax Credit

Child Tax Credit is a government program that assists parents with the costs of raising a child. Only one household is eligible for a Child Tax Credit for each child. However, you can claim a Child Tax Credit only if you are eligible for getting Working Tax Credit.

Child Benefit

A monthly payment to parents or custodians of children under 16 years is known as Child Benefit. If your child is 16-17 years of age and is in full-time study or training or has a handicap and cannot support themselves, you may be eligible for Child Benefit.

Incapacity Benefit

Incapacity Benefit is money for persons who are unable to work due to illness or disability. However, you cannot file a new Incapacity Benefit claim because it has now been replaced by Employment and Support Allowance (ESA).

Fostering Allowance

The fostering allowance covers food, clothing, school uniforms, school books, extra-curricular activities, school trips, pocket money (depending on the child's age), and treats such as toys/games/holidays. It is provided to the foster caregivers of a child.

Industrial Injuries Disablement Benefit

Industrial Injuries Disablement Benefit (IIDB) is a tax-free, non-contributory benefit paid to those who have been incapacitated due to a workplace accident or one of over 70 prescribed diseases linked to certain occupations.

Which Benefits Don't Count as Income?

There are certainly other types of benefits that many lenders consider as a part of the income. These are:

Housing Benefit

If you're unemployed currently, have a low income, or are on benefits, Housing Benefits can help you pay your rent. However, it is also being phased out in favor of Universal Credit.

Income Support

Income Support is a government program that assists low-income individuals. However, you won't be able to file a new claim for it, but you might be eligible for Universal Credit instead.

Job Seekers' Allowance

Unemployed persons receive a payout called Job seeker's Allowance.

Job seeker's Allowance is a means-tested benefit, which means you must earn less than a specified amount to qualify.

Pension Credit

If you're over the age of the State Pension and have a modest income, you may be eligible for Pension Credit. Pension Credit can also help with housing expenses like ground rent and service fees.

Eligibility Criteria for Benefit Loans at UK Bad Credit Loans

Even if you have a regular source of income, you must still meet specific requirements to be authorized for a short-term loan. Such as:

Over 18 Years of Age

To qualify for the loan, the borrower must be over 18 years of age.

Must be a UK resident

It is also necessary for the borrower to be a UK resident.

Must have a UK bank account

Other than these two, the borrower must have a bank account in a UK-based bank.

Looking to Borrow Money Easily?

1 month

Representative Example: Rates from 43.1% APR to 1333% APR. Minimum Loan Length is 1 month. Maximum Loan Length is 36 months. Representative Example: £1,200 borrowed for up to 75 days. Total amount repayable is: £1506. Interest charged is 0.34% per day, amounting to £306, annual interest rate of 124% (variable). Representative APR: 49.7% (variable).

Can I Apply for A Loan on Universal Credit?

Yes, the loan application process for Universal Credit recipients is the same as it is for everyone else. But bear in mind that while some lenders specialize in loans for those on benefits, these options may be limited for you than if those getting a higher level of income from work.

Are Guarantors Required to Get Benefit loans?

Some lenders may ask for a guarantor if you are on benefits and wish to apply for a loan; this will depend on the sort of benefits you receive and how much you want to borrow.

Our partner lenders will send your loan application to a panel of direct lenders when you apply for a loan through New Horizons. These lenders will conduct a mild search on your application that will have no effect on your credit score. They also collaborate with a variety of lenders who offer loans without a guarantor if you don't have one.

Alternative Options – Budgeting Loans and Budgeting Advance

Getting a short-term loan may not be the best solution to their financial troubles for those who receive benefits. Even though some payday lenders claim to offer payday loans to persons on benefits, potential borrowers should always assess how a loan would affect their finances and be aware of all available options.

Applying for a Government Budgeting Loan is another option. Benefit users will be eligible to receive a budgeting loan for at least six months. If accepted, the funds will be provided as an interest-free credit that you can use to buy household items, pay rent, or cover other essential payments.

Budgeting Advances is another possibility. They're available to Universal Credit recipients and may be used to pay unforeseen one-time expenses. The amounts would be deducted automatically from future Universal Credit payments.


UKBadCreditLoans help you get loans easily and instantly, even if you are on benefits. While some of the benefits are not considered income by the lenders, some do. So, it is recommended to see if the benefit you avail of is regarded as a part of your income. In addition, to be eligible to take out a loan, you have to be above 18 years old, have a UK bank account, and be a UK resident. Some of the lenders may require a guarantor.

However, note that getting a short-term loan may not be the best solution you are looking for. Thus, you should look for cheaper and better alternatives. Even if you decide to go ahead with the short-term loans, read all the loan-related documents carefully and get clarity on all the terms and conditions before signing the agreement.

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