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Loans for People on Benefits with No Upfront Fees 2022

Loans For People On Benefits

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

If you’re an individual who’s on benefits and you need a loan, you may find it difficult to find a lender willing to approve your loan.

Lenders can get apprehensive about approving loans to people who are on benefits for many different reasons which we will get into in this post. 

Today, I’ll tell you about what your approach could be if you’re looking for a loan when you’re on benefits and with no upfront fees. 

Why is it Difficult Getting a Loan on Benefits? 

When you apply for any type of loan, be it a short-term, long-term, unsecured or secured one, it’s the lender’s responsibility to do a complete financial and ethical check on you.

This check is to ensure that you will be able to pay back your debt in full within a reasonable time frame. 

Thus, it’s essential for you to check out a lender’s eligibility criteria before you apply to them for a loan. 

One of the most basic requirements that all lenders have is for you to be able to prove that you will be able to make your debt repayments in full according to the repayment plan offered by the lender. 

The minimum income requirement may change from lender to lender and it will also vary depending on how much money you are borrowing. 

If you are a person who is on benefits, there are a number of lenders you can look to who will be responsive to your loan application.

You are more likely to get approved for a loan if you have benefits that are long-term or permanent.

For example, you’re more likely to get approved for a loan if you have Disability Living Allowance but if you have some other sort of benefits which are temporary, then lenders may look upon your application less favourably. 

How Quickly Can I Get a Loan on Benefits with No Upfront Fees? 

This can depend on a number of factors such as your lender as well as the amount of borrowing money

It’s true that there do exist lenders that can process your application and send the money to your account on the same day, but they are rare.

In reality, you will most likely have to wait at least a few days before your application is processed and your loan is approved

The Role of Credit Unions in Obtaining Loans for People on Benefits 

If you’re struggling to find a lender who provides loans to people on benefits with no upfront fees, then looking towards your local credit union may be a smart approach. 

In fact, it’s one of the main goals of credit unions to help individuals who are excluded from the mainstream avenues of obtaining loans for a variety of reasons obtain credit at an affordable rate. 

Since credit unions are nonprofit organisations, you will not have to pay any type of upfront fees when you go to them to find a loan. 

You will also find that their interest rates are much lower than those you may have seen in the mainstream financial market. 

Credit unions assess all individuals that apply for loans including those who are receiving benefits. 

Credit unions may assess your application and ask you further questions which would help them respond favourably to your application.

Furthermore, they will also offer you advice as to how to best pay back your debt to them once you’re approved. 

Credit unions accept loans from individuals who are receiving many different types of benefits as well such as: 

  • Universal credit
  • Income Support
  • Child and Working Tax Credit
  • Disability Living Allowance
  • Child Maintenance Benefits
  • Employment and Support Allowance
  • All other types of benefits available in the UK

In order to find your local county credit union, you can go to

Don’t worry, here’s what to do!

There are several debt solutions in the UK that can be used to improve your finances. Choosing the right way to tackle your debt could save you time and money, but the wrong one could cause even more harm

It’s always best to find out about all your options from a professional before you take action.

Fill out the 5 step form to get started. 

People on benefits loans

What are Some Basic Requirements to Apply for a Loan? 

To apply for a loan, you should:

  • Be over the age of 18
  • Be a citizen of the UK
  • Have a UK bank account
  • Have a source of income. This could be your benefits. You don’t necessarily need to have a job. 

What Information Do I Normally Need to Give When Applying for a Loan? 

Firstly, when you’re looking at lenders, it’s very important that you ensure that they are registered in England, Wales or Northern Ireland. 

You must also ensure that they are authorised and regulated by the Financial Conduct Authority (FCA). This is because lenders authorised and regulated by the Financial Conduct Authority have to follow a strict set of guidelines which ensure that you are dealt with fairly throughout the entire process. 

Most lenders will ask you for the following information: 

  • Your personal information such as your name, contact, address, etc. You will be asked to provide proof of identification. A driver’s licence or a passport can work for this. 
  • Information regarding your UK bank account
  • Proof that you have been a resident of the UK for a minimum of a three-year period. 
  • An estimate of your monthly income as well as your monthly expenditures. The more documentation you can provide regarding this, the stronger your application will be. 
  • Complete details about what your salary is and the amount of money you receive each month as benefits. 
  • Any expenditures you have regarding other debts such as a mortgage. Your essential living costs also need to be included in your expenditures such as money spent on fuel, utilities, groceries, etc. 

Always Assess Your Eligibility and Other Information on Your Own Before Applying for a Loan 

Most lenders have their eligibility criteria available publically before you even apply for their loan.

Thus, it’s a very good practice to look at their eligibility criteria before you actually approach them with a loan application.

There are two main reasons for this:

Firstly, some lenders may charge you money to perform their affordability assessment. Obviously, you do not want to spend money on fees for a loan application and end up not even getting the loan.

Secondly, if you get rejected for a loan, then this shows up on your credit file and has a negative impact on your credit score. Not only does your credit score suffer but you may also be prevented from applying to other loans for a short period of time if this happens. 

Thus, when considering short-term loans, you should always assess your eligibility on your own. 

This goes without saying but you should also look thoroughly at all the information the lender has provided to ensure they don’t have any upfront fees or hidden costs throughout the process. 

As I mentioned earlier, one more thing you must keep an eye out for is that the lender is registered in England, Wales or Northern Ireland. 

Secured Loans vs Unsecured Loans 

As you can probably imagine, secured loans are much easier to get approved for if you’re on benefits since lenders are provided with a valuable asset of yours as collateral should you fail to keep up with your repayments. 

Not to mention that secured loans also typically have a lower interest rate compared to most unsecured loans. 

That being said, if you’re looking for a short-term loan, then a secured loan with no upfront fees may be quite hard to come by.

This is because secured loans are typically designed for the lending of typically higher amounts of money which is repaid over a long period of time. 

Thus, if you need a short-term loan, then maybe opting for an unsecured loan might be the smarter option.

However, as I said earlier, securing an unsecured loan when you’re on benefits will most definitely be harder. 

However, if you can prove that you’ll be able to make the payments reliably and if you have a respectable credit rating, then the chances of your loan application being approved will rise dramatically. 

As long as you can assure the lender that you will be able to make your payments on time and in full, there’s really no reason for them to reject your application. 

Try to provide as much documentation and proof about your income, benefits and expenditure as you can. Be sure to provide them with copies of bills, receipts and bank statements and keep the originals to yourself. 


It’s true that loans for people on benefits that have no upfront fees can be difficult to find. 

They’re rare but they do exist. With enough research and searching, you can definitely find a lender that will be most suitable for your needs.  

Just be sure to keep an eye out for any hidden fees as well as the interest rate when looking at certain loans for yourself. 

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