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Crisis Loans

Author: webadmin And Facted Checked by : Shanie Capper
Last updated on : 21 May 2024

We all sometimes get into a situation where we need a little helping hand, and when we are in financial trouble and need money fast – we might turn our attention to Government help.

You may have previously heard about a crisis loan that the UK Government offered. These types of loans have changed their name and they are now known as budgeting loans. However, they’re not available for everyone. If you need one of these loans due to financial difficulties, you will need to visit the Gov.uk website and formally apply. Of course, there’s a lot more to know here and there are other options which might be better for you, especially if you do not qualify for Government help. So, if you want to know more - then read on!

You may have previously heard about a crisis loan that the UK Government offered. These types of loans have changed their name and they are now known as budgeting loans. However, they’re not available for everyone.

If you need one of these loans due to financial difficulties, you will need to visit the Gov.uk website and formally apply.

Of course, there’s a lot more to know here and there are other options which might be better for you, especially if you do not qualify for Government help. So, if you want to know more – then read on!

What Is A Crisis Loan?

A crisis loan, now known as a budgeting loan, is a special type of Government provided loan which can be provided to you to help out with some costs associated with the following:

  • Essential furniture
  • Clothes
  • Advanced rent
  • Moving home
  • Home improvements
  • Travel costs
  • Maternity costs
  • Repaying other loans or finance plans
  • Funeral expenses

This is not an exhaustive list though, so you would need to speak to an advisor in more detail if you do not see the specific reason you are looking for this type of loan.

Am I Eligible For A Crisis Loan?

Unfortunately, these budgeting loans are not available for everybody. Generally speaking, you need to be in receipt of specific Government assistance (benefits) for a given time.

If you have been in receipt of:

  • Income support
  • Income-based JSA (job seekers allowance)
  • Income-based ESA (employment and support allowance)
  • Pension credit)

And you’ve been in receipt of these for more than six months, then you might be eligible for this type of loan. However, it’s important to note that if you are in receipt of Universal Credit, you need to apply for a budgeting advance instead.

Your work coach will know more about this, so be sure you speak with them about your needs and circumstances.

How Does This Loan Work?

If you are eligible, you could borrow between £100 and £812 depending on your personal circumstances (for example, if you are claiming child benefit). On top of this, your savings and finances will be scrutinised to assess if you can afford to pay the loan back.

If you are eligible for this type of loan and you are granted the loan, then the money will be made available to you as soon as possible. After which, the repayments will automatically be garnished from your future benefit payments.

What If I’m Not Eligible?

If you’re not eligible for this type of loan and you’re still in financial hardship, then there are some other options available. However, if you have exhausted all avenues with the Government financial assistance – then you should consider the following options:

Unsecured Loan

An unsecured loan is a loan based on your financial situation. The lender will assess your credit report, your financial circumstances and general information. If you are approved, then you could receive the money in minutes.

These loans can be very useful, but they’re not for everyone. For example, if you have a poor credit score, the repayments will likely be very expensive due to the risk to the lender.

They will almost always charge a high interest rate, and sometimes you will not be accepted at all for this type of loan, at least not without a guarantor.

Payday Loan

UK Payday loans are a type of secured loan that are generally for smaller amounts of money, however the repayments are usually required in a short amount of time. Not only this, you will likely find that the interest rates are incredibly high for these types of loans.

Having said this, payday loans can be useful for some people, depending on their circumstances and the terms of the loan specifically. Of course, it’s important that you pay attention to the lender’s terms and conditions if you are thinking about this type of loan.

Secured Loan

It’s unlikely that you will want to apply for a secured loan if you’re looking for short term money. Nonetheless, it’s important that we discuss them. Secured loans are often known as homeowner loans, and they use your home as collateral.

These types of loans are typically easier to be accepted for because the lender’s risk is reduced, due to the fact they have collateral in the form of your home, in case you were to default on the credit agreement.

However, as we said – these loans aren’t for short term financial solutions. Typically, these are larger sums of money for a long duration of time.

Credit Card

A credit card could be the answer you’re looking for if you are after a short term financial solution. There are numerous types of credit cards out there, and typically the best ones will be exclusive to those with a higher credit score.

If you think a credit card is right for you, make sure that you understand your credit limit and the terms of your credit agreement. It’s essential that you pay attention to the interest rate – and if possible, try to find one for 0%.

However, it will depend on what you need the credit card for – as we said, there’s lots of different types of credit cards, and some are specific for a particular type of payment.

Final Thoughts

Crisis loans, now known as budgeting loans, are available to certain people in the UK – but they’re not universal. It’s important that you take a look at the UK.Gov website and check your eligibility if you think you might qualify.

If not, carefully assess your other options and see what could be best for you!

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

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