What Are The Eligibility Criteria for Loans for People on Benefits In 2024

Getting Loans for People on Benefits may seem odd, but there are several methods to borrow money while getting state assistance.

Benefit loans are marketed as one alternative, but they need to be understood and require considerable thought before you take them.

In most cases, options such as interest-free loans provided by the government to persons receiving assistance should be considered first.

Continue reading to learn more about benefit loans and the options available to you.

Can I get a loan on benefits?

If you get benefits, you can acquire a loan from a lender, but there will be fewer possibilities, and it will almost certainly cost you more than if you could get a more traditional personal loan.


You may face a similar dilemma if you apply for a mortgage on benefits.
When looking for loans for those on benefits, you’ll discover that they’re typically only available from specialist lenders rather than the more common high-street banks and lending institutions.

Whether you can afford to repay the money you want to borrow will be a factor in evaluating whether you can acquire a loan.


This can be challenging if your income is primarily or fully dependent on benefits, which is why interest rates on loans for people on benefits are typically so high.

What are the eligibility criteria for a benefits loan?

Loans for those on benefits are likely to follow the same basic standards that apply to other types of loans in the UK. Generally, this includes:

  • being aged 18 or over
  • being a UK resident
  • having a UK bank account

At the same time, you’ll need to demonstrate to the lender that you can pay back the loan.

The criteria used here will normally differ between lenders, which is why you may be turned down for a loan by one but approved by another.

Typically, a lender will examine your credit score to determine your credibility as a borrower.

But, more crucially, lenders want to know that you have a consistent income that may be used to repay your debt once you’ve met your normal expenses.

For a regular personal loan, this would typically come from employment, but with loans for people on benefits, lenders would consider certain benefits to be income-eligible for loan repayment.

What loan terms are available?

Lenders who offer benefit loans often provide a variety of repayment options. The shortest starts at one month, while the longest lasts for 60 months.

The longer terms may only be accessible when borrowing higher amounts.
How to apply for a loan with benefits.

If you want to apply for a loan with perks, you’ll usually go through an internet broker.

The application process varies significantly depending on the broker, but normally, to get started, you’ll need to state the amount you want to borrow, the repayment term, and how you want to utilize the loan.

You’ll also need to provide personal information, such as your salary, benefits, job status, and regular expenses.

In general, this allows a broker to run a soft search of your credit history, which will not damage your credit score, and determine whether any lenders are willing to provide you with a loan.

If there is no mention of a soft search, be aware that a hard search may be conducted, which might harm your credit rating and appear on your credit report.

If it appears that you may be eligible for a loan and you choose to proceed, you must complete the lender’s application form and permit a hard credit search (if one has not already been completed).

If these last inspections result in formal approval for a loan, you can accept the offer. Depending on when this is completed, you may receive the money in your account the same day or the next.

Do I need a guarantor to secure a loan with benefits?

Some lenders will not require you to have a guarantor, while others will. A guarantor is typically a friend or relative who guarantees to repay what you owe to a lender if you do not. If you have bad credit, a lender may require a guarantor.

Is a benefit loan a good idea?

Choosing a benefit loan is determined by your specific circumstances and financial goals. Consider the following variables before making a decision:

Assess your needs: Evaluate your financial status and decide whether taking out a loan is the best option.

Consider alternate options, such as budgeting or getting financial assistance, if available.

Understand the costs: Examine the interest rates, repayment terms, and associated expenses.

Ensure you understand the loan’s overall cost and how it fits into your budget.

Your ability to repay: Assess your ability to repay the loan using your benefit income.

Consider whether the loan repayments will be affordable and sustainable over the whole loan term.

Seek Advice: If you are confused about the best course of action, consult a financial expert or a respected credit counseling organization. They can offer tailored advice, depending on your circumstances.


Can I acquire a loan using Universal Credit?
Yes, loans are available for people on universal credit. Simply include this salary in your loan search application, and you will be able to evaluate appropriate possibilities.

How long does it take to obtain funds from a benefits loan?
The time it takes to receive funds varies among lenders. Following loan approval, cash is often disbursed within a few hours or business days.

Are benefit loans reserved for people with bad credit?
While there are specific loans for people with bad credit and benefits, benefit loans are open to anyone on benefits, regardless of credit history.

Whether you have good or terrible credit, lenders understand the particular circumstances of those on benefits and can provide appropriate lending solutions.


If you are on benefits and are dealing with debt or your overall financial condition, borrowing through a loan may not be the best choice.

It may exacerbate their condition. It is usually preferable to seek debt relief in these cases rather than hoping the problem will go away.


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