Loans for people on benefits.

Loans for People on Benefits: Your Options Explained

Receiving benefits does not mean you are locked out of borrowing. If you have a regular income from benefits such as Universal Credit, Personal Independence Payment (PIP), or Employment and Support Allowance, lenders on our panel may still be able to help.

New Horizons searches over 50 FCA-authorised lenders to find loans for people on benefits, with no fees and no impact on your credit score when you check eligibility. Whether you need to cover an unexpected bill, replace a broken appliance, or bridge a gap between payments, our Soft Credit Match technology can show you what is available in minutes.

Many people assume that being on benefits automatically rules them out of getting a loan. That is not the case. What matters to lenders is whether you can comfortably afford the repayments, not where your income comes from. If your benefits are paid regularly into a UK bank account, you may have more options than you think.

If you also have concerns about your credit history, our lender panel includes specialists in loans for bad credit who look at your current circumstances rather than just your past.

Which Benefits Count as Income for a Loan?

Not all benefits are treated the same by lenders. Some are considered regular income, which means they can support loan repayments. Others are not. Knowing where your benefits stand before you apply can save you time and help you set realistic expectations.

Benefits that are commonly accepted as income by lenders include:

• Universal Credit
• Child and Working Tax Credit
• Personal Independence Payment (PIP)
• Disability Living Allowance (DLA)
• Employment and Support Allowance (ESA)
• Carer’s Allowance
• Child Benefit
• Incapacity Benefit
• Fostering Allowance

As a general rule, lenders view long-term or permanent benefits more favourably than short-term or temporary ones. If your benefit is paid on an ongoing basis with no fixed end date, it provides the regular income that lenders need to see.

Benefits that are generally not accepted as income include:

• Jobseeker’s Allowance (JSA)
• Income Support
• Housing Benefit
• Pension Credits

If you receive more than one type of benefit, lenders will usually consider the combined total. You do not need to provide a breakdown of each individual payment. Simply enter the total monthly amount when completing your application.

For those receiving benefits alongside part-time employment, both income sources can be counted together, which may increase the amount you are able to borrow.

How Loans for People on Benefits Work at New Horizons

Applying through New Horizons follows the same straightforward process whether your income comes from employment, self-employment, or benefits. There is no separate application form and no different treatment.

1. Complete our short online form with your personal and financial details, including your benefit income
2. We run a Soft Credit Match across our panel of over 50 FCA-authorised lenders
3. If matched, you see your loan options in minutes, with no impact on your credit score
4. Choose the offer that works for you, or walk away with no obligation
5. If you accept an offer, the lender completes a full affordability check
6. If approved, funds can be in your account within 15 minutes*

Our Soft Credit Match will not leave any mark on your credit file. Only you can see the soft search on your credit report. Other lenders will not know you have checked, and it will not affect your score. A full credit check only happens if you choose to accept a loan offer from a specific lender.

You can apply 24 hours a day, 7 days a week. If you need funds quickly, our same day loans page explains more about how fast the process can be.

What you need to know

Why use us?

How much can new customers borrow?

Up to £5,000

No fees, ever!

What are the repayment terms?

3 to 36 Months

No paperwork

Representative APR

49.9% (variable)

No obligation quote

Can I apply with bad credit?

Yes

Instant decision

Can I repay in instalments

Yes

Flexible repayment

Do lenders credit check?

Yes

We only soft-search

Eligibility Requirements for Loans on Benefits

To check your eligibility with New Horizons, you will need to meet some basic requirements. These apply to all applicants, whether your income comes from benefits or employment.

• Be at least 18 years old
• Be a UK resident
• Have a regular income (which can include benefits)
• Have a UK bank account where your benefits are paid
• Provide accurate personal information

You will not be treated differently because your income comes from benefits. Our lenders assess affordability based on your overall financial situation, not where your money comes from. If the repayments fit comfortably within your budget, you have the same chance as any other applicant.

No guarantor is required. You do not need to ask a family member or friend to back your application. For more details on this, see our no guarantor loans page.

Different Types of Loans for People on Benefits

Can I Get a Loan on Universal Credit?

Universal Credit is one of the most widely accepted benefit types among our lender panel. Because it consolidates several payments into a single monthly amount, it provides lenders with a clear picture of your regular income.

If you receive Universal Credit, you can apply for a loan between £50 and £5,000 through New Horizons. Your application will be processed in exactly the same way as someone earning a salary. Simply select your income source during the application and enter your monthly Universal Credit payment amount.

Before taking out a loan on Universal Credit, it is worth checking whether you qualify for a Budgeting Advance from the Department for Work and Pensions (DWP). These are interest-free loans that are repaid through small deductions from your future Universal Credit payments. We cover this in more detail in the alternatives section below.

Can I Get a Loan on PIP or Disability Benefits?

Personal Independence Payment (PIP) and Disability Living Allowance (DLA) are both accepted as income by many lenders on our panel. Because these are long-term, regular payments, they provide the consistent income that lenders look for when assessing affordability.

If PIP or DLA is your only source of income, you can select “Disability Benefits” as your income type on our application form. If you receive PIP alongside other benefits or part-time earnings, you can combine the total and enter it as your monthly income.

You do not need to disclose your specific condition or provide medical evidence. Lenders are interested in affordability, not the reason you receive disability benefits. Your application is treated with the same respect and process as any other.

If you are concerned about managing repayments alongside your existing commitments, it may help to explore smaller loan amounts. Our £500 loan and £200 loan pages can give you an idea of what is available at lower amounts.

Understanding the Costs of Loans for People on Benefits

Borrowing money always comes with a cost, and it is important to understand exactly what you will pay before accepting any offer. New Horizons is completely transparent about pricing so you can make an informed decision.

• Representative APR: 49.9% (the rate at least 51% of successful applicants receive)
• APR range: 9.3% to maximum 1721%
• Loan amounts: £50 to £5,000
• Repayment terms: 3 to 36 months
• Fees from New Horizons: None, ever

Representative example: Amount of credit: £1,200 for 18 months at £95.44 per month. Total amount repayable: £1,717.83. Interest: £517.83. Interest rate: 49% pa (fixed). Representative 49.9% APR.

The rate you are offered will depend on your individual circumstances, including your income, outgoings, and credit history. You will always see the exact terms before accepting anything, so there are no surprises.

New Horizons never charges any fees to customers. Our service is completely free to use. We are paid by lenders, never by you. This is a key difference from some other brokers who charge upfront fees regardless of whether you are matched with a lender.

Loans on Benefits with Bad Credit

If you are receiving benefits and also have a less than perfect credit history, you are not alone. Many people in this situation worry that the combination of benefits income and past credit issues will make borrowing impossible. That is not necessarily the case.

Our panel includes lenders who specialise in working with people who have had credit difficulties in the past. Whether you have missed payments, defaults, CCJs, or simply a thin credit file, these lenders look at your current affordability rather than focusing solely on your credit score.

Checking your eligibility through New Horizons will not make your credit situation any worse. The soft search is invisible to other lenders and has no effect on your score. If you have been turned down elsewhere, our guide on how to get a loan accepted offers practical steps you can take.

Working on rebuilding your credit? Our tips on how to improve your credit score can help you strengthen your position over time.

Why Choose New Horizons for Loans on Benefits

New Horizons was established in 2017 with a clear purpose: to offer a better, more ethical alternative in the loan broker market. Our approach is built on transparency, fairness, and putting customers first.

Here is what sets us apart:

• 50+ FCA-authorised lenders searched with a single application
• Soft Credit Match that will not affect your credit score
• No fees, ever. Our service is completely free to you
• Feefo Gold Trusted Service rating based on verified customer reviews
• 24/7 availability so you can apply whenever suits you
• Funds within 15 minutes of approval for many lenders

We also make a formal Customer Promise built on three commitments we call The Three Nevers:

• We never sell your personal data
• We never contact you to sell other products
• We never give consent to other companies to contact you

These are not just words on a page. They reflect how we operate every day. New Horizons Finance Ltd (Company No. 11757330, FCA reference: 834535) is an Appointed Representative of Flux Funding Limited (FRN 806333), which is authorised and regulated by the Financial Conduct Authority.

If speed is a priority, you may also want to explore our quick loans page for more on how fast the process works.

Alternatives to Loans for People on Benefits

A loan is not always the right answer. Before borrowing, it is worth considering whether any of these alternatives could help.

Budgeting Advances (Universal Credit): If you have been receiving Universal Credit for at least six months, you may qualify for an interest-free Budgeting Advance from the DWP. You can borrow between £100 and £812 depending on your circumstances, and repayments are taken automatically from your future Universal Credit payments. Apply through your Universal Credit online account or speak to your work coach.

Budgeting Loans: If you receive Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, or Pension Credit, you may qualify for an interest-free Budgeting Loan instead.

Credit unions: These community-based lenders often offer small loans at much lower interest rates than commercial lenders. You will usually need to become a member first, and loan amounts tend to be smaller. You can find your nearest credit union at findyourcreditunion.co.uk.

Local welfare assistance: Many councils operate hardship funds or welfare assistance schemes that provide grants or emergency payments. These do not need to be repaid. Contact your local council to find out what is available in your area.

Benefits check: You may be entitled to benefits you are not currently claiming. Use the free benefits calculator at Turn2us or speak to Citizens Advice to make sure you are getting everything you are entitled to.

Free debt advice: If you are struggling with existing debts, borrowing more is rarely the answer. Free, confidential help is available from MoneyHelper, StepChange, and Citizens Advice.

Responsible Borrowing When You Are on Benefits

Taking out a loan is a commitment, and it is especially important to borrow responsibly when your income is fixed. Here are some things to consider before applying.

• Can you afford the repayments? Work out your monthly budget including rent, bills, food, and other essentials. Only borrow if the repayments fit comfortably within what is left
• Have you explored alternatives? Check whether a Budgeting Advance, grant, or other support could meet your needs without borrowing
• Are you borrowing the minimum? Only borrow what you genuinely need, not the maximum you are offered
• Do you understand the full cost? Look at the total amount repayable, not just the monthly payment
• What happens if your circumstances change? Consider whether you could still afford repayments if your benefits were reassessed or reduced

Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk

All lenders on our panel are required to carry out affordability checks before approving any loan. This is designed to protect you from borrowing more than you can reasonably repay. If you are not matched with a lender, it may be because the repayments would stretch your budget too thin, and that is the system working as it should.

Frequently Asked Questions About Loans for People on Benefits

Can I get a loan if my only income is from benefits?

Yes, provided your benefits are classed as income by lenders. Universal Credit, PIP, DLA, ESA, Child Benefit, and Working Tax Credit are all commonly accepted. The key factor is whether you can afford the repayments, not the source of your income.

Will applying for a loan affect my benefits?

Taking out a loan does not affect your benefit entitlement. However, if you receive a lump sum and hold it in your savings account, it could affect means-tested benefits if your savings exceed certain thresholds. It is best to use the funds for their intended purpose promptly.

How much can I borrow on benefits?

Through New Horizons, you can apply for loans from £50 to £5,000. The amount you are offered will depend on your income, outgoings, credit history, and the lender’s individual criteria. Borrowing a smaller amount increases your chances of approval and keeps repayments manageable.

Do I need a good credit score to get a loan on benefits?

No. Our lender panel includes specialists in bad credit loans who consider applicants with all credit histories. While a better credit score may give you access to lower interest rates, having a poor score does not automatically mean you will be declined.

Will checking my eligibility affect my credit score?

No. New Horizons uses a Soft Credit Match that is invisible to other lenders and has no impact on your credit score. A hard credit check only happens if you accept a loan offer from a specific lender.

Can I get a loan on Universal Credit?

Yes. Universal Credit is one of the most widely accepted benefit types among lenders. Because it provides a single, regular monthly payment, it gives lenders a clear view of your income. You may also want to check whether you qualify for an interest-free Budgeting Advance from the DWP first.

Can I get a loan on PIP?

Yes. Personal Independence Payment is accepted as income by many lenders on our panel. You do not need to provide medical evidence or disclose the nature of your condition. Simply select disability benefits as your income source and enter your monthly payment amount.

How quickly will I receive the money?

Once approved by a lender, funds can be sent within 15 minutes.* The time it takes to reach your account depends on your bank’s processing times. If approved, many applicants receive funds on the same day. For more on timing, visit our same day loans page.

What is a Budgeting Advance and am I eligible?

A Budgeting Advance is an interest-free loan from the DWP for people on Universal Credit. You can borrow between £100 and £812 depending on your circumstances. You must have been receiving Universal Credit for at least six months, and any previous Budgeting Advance must be fully repaid. Repayments are deducted automatically from your future payments.

Do I need a guarantor?

No. All loans through New Horizons are assessed on your individual circumstances. You will not be asked to provide a guarantor at any stage of the application process.

What if I am on Jobseeker’s Allowance?

Jobseeker’s Allowance is generally not accepted as income by lenders on our panel. If JSA is your only income, you are unlikely to be matched with a loan. In this situation, a Budgeting Loan from the government or support from a local welfare scheme may be more suitable options. If you have other income alongside JSA, you may still be able to apply. See our unemployed loans page for more information.

Are there any fees for using New Horizons?

No. New Horizons does not charge customers a fee for using its services. There are no upfront costs, no hidden charges, and no catches. We are paid by lenders when a loan is successfully arranged, so our service is always free to you.

What happens if I am not matched with a lender?

If we cannot find a match, your credit score will not have been affected. The soft search leaves no mark on your credit file. You can then explore the alternatives mentioned above, such as Budgeting Advances, credit unions, or local welfare support. You are also welcome to try again if your circumstances change.

Is it safe to apply online?

Yes. New Horizons uses the latest encryption and security technology to protect your personal data. We are registered with the Information Commissioner’s Office (registration number: ZA496853) and our Customer Promise guarantees we never sell your data or share it with third parties for marketing purposes.