MONEY can be tight if you are waiting for a Universal Credit payment to come through.
But if you’re feeling stuck you can apply for an advance loan – and it’s interest free.
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The payment is designed to help you pay for food, gas, electricity and other essentials while you wait for regular payments to kick in.
However, there is a catch – you have to pay the money back as it’s a loan.
The repayments may also mean the amount of Universal Credit you receive could be reduced in the following months.
It can take up to five weeks before you are enrolled on the Universal Credit system, and in the meantime any existing benefits you receive will stop altogether too.
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It might be useful to apply for an advance payment especially during holiday seasons like Christmas where it can be difficult to keep the ball rolling.
We’ve put together a guide to all you need to know about advance payments before taking one out.
What is a Universal Credit advance payment?
An advance payment is a loan that you can ask for to help you through the wait for your first Universal Credit payment.
That wait is made up of a one month assessment period plus another week for the payment to reach your account.
So the advance is designed for people who need help to pay the bills or cover other costs while they wait.
Claimants can borrow up to 100% of their estimated payment, but you can also ask for less.
It’s an interest-free loan which means you will only pay back what you borrow.
But remember, you will be expected to pay it back.
The money will be transferred to you within three working days and is supposed to last the full five weeks before your first payment.
You can also get an advance payment if your circumstances have changed and you will get a larger payment, but you aren’t getting the increased amount yet.
In this case, you can’t apply online. Instead, you need to apply by ringing the helpline on 0800 328 5644.
Be aware that an advance payment is different from a budgeting advance – here, you can get up to £812 to help you get by.
How to apply for an advance payment
You can apply for a Universal Credit advance before you get your first payment.
If you are already being paid Universal Credit, and have told the DWP of a change in your circumstances that means you will be paid more, but have not yet been paid the increased amount.
You can apply for an advance payment in your online account, through your Jobcentre Plus work coach, or by calling the Universal Credit helpline.
You’re allowed to request the loan from the moment you first apply for Universal Credit until the date you get your first payment.
You’ll need to explain why you think you need the advance, verify your identity (at your first Jobcentre Plus interview) and provide bank details for the advance.
If you can’t open a bank account, speak to your work coach.
You’ll usually be told the same day if you will get your advance loan.
If you need help, call the Universal Credit helpline on 0800 328 5644 (Textphone: 0800 328 1344).
Lines are open from 8am-6pm, Monday to Friday.
When do I have to pay an advance payment back?
Claimants who are taking out a new loan are expected to pay it back within the first 24 months of getting it.
It used to be only within 12 months, but the length of time to repay doubled in April to hopefully reduce the number of people falling into debt.
The way it works is that the Department for Work and Pensions deduct an amount from your Universal Credit payment every month, starting with your first pay out.
You can work out how much will be deducted from your payment every month by dividing the full cost of the loan by 24.
For example, if you borrowed £1,500 you will see £62.50 taken off your Universal Credit payment every month.
You can ask for your repayments to be delayed for up to three months if you can’t afford them, but this will only be allowed in exceptional circumstances.
If you apply for an advance online you will be shown on screen the repayment amounts for different repayment periods.
If you ring the helpline and are successful in your application they will tell you over the phone:
- how much you can have
- the monthly repayment amounts
- when the first repayment is due
You still have to pay it back within 12 months if you applied for the advance before April 12 this year though.
You only have six months if you’ve applied because of a change in circumstances, but you can ask for your repayments to be delayed by one month in this case.
Do I still have to pay it back even if I’m no longer on Universal Credit?
You will still be expected to repay the loan even if you get a job and are no longer claiming benefits.
You’ll get a letter telling you how much you owe.
If you can’t afford to pay it all back you need to contact the DWP Debt Management contact centre.
They can help you work out an affordable repayment plan and also support you in setting up monthly direct debits and paying in slips for cash or cheques.
You can call the Debt Management centre on 0800 916 0647.
If you ignore your debts, the DWP can have the amount you owe deducted directly from your earnings or pass the debt onto a debt collection agency.
Can I be refused an advance payment?
Not everyone is automatically entitled to an advance loan and you may be refused.
You won’t be able to get one if the Department for Work and Pensions thinks you have enough money to last you until your next payment such as from final earnings or redundancy payments.
You will be refused one if you have savings, or are living with parents, relatives or friends.
You’ll also be denied an advance if you haven’t had your identity checked.
You can ask for the decision to be reconsidered but you don’t have the right to appeal it.
If you’re refused a loan but are in need of help, you can apply for a Budgeting advance to help you with any emergency household costs.
This can be to help towards things like emergency household costs such as replacing a broken cooker, getting a job or staying in work or even funeral costs.
The smallest amount you can borrow is £100 but you can get up to:
- £348 if you’re single
- £464 if you’re part of a couple
- £812 if you have children
Budgeting advances are also repaid directly from your Universal Credit payments.
