How the loan is repaid

Before you get a loan, you will be asked to agree the amount of the weekly repayments. Repayments will be made by deductions from your or your partner?s Income Support, income-based Jobseeker?s Allowance, Employment and Support Allowance (income-related) or Pension Credit, as long as you get enough Income Support, income-based Jobseeker?s Allowance, Employment and Support Allowance (income-related) or Pension Credit to allow this. If you or your partner stop getting Income Support, income-based Jobseeker?s Allowance, Employment and Support Allowance (income-related) or Pension Credit, deductions can then be made from any of the following:

• Contribution-based Jobseeker?s Allowance
• Employment and Support Allowance (contributory)
• Maternity Allowance
• Incapacity Benefit
• Severe Disablement Allowance
• Industrial Injuries Disablement Benefit
• Industrial Disablement Pension
• Industrial Death Benefit
• Reduced Earnings Allowance
• Carer?s Allowance
• State Pension (including non-contributory State Pension)
• Widowed Mother?s Allowance
• Widowed Parent?s Allowance
• Widow?s Pension
• Bereavement Allowance
• Graduated Retirement Benefit.

If you stop getting any of these, or if you are not getting enough for deductions to be made, other arrangements will be made with you for repayment. These might be by cash, cheque or postal order, or by direct debit from a bank account you have. You can also pay off all the money you owe in a lump sum, if you become able to do so.

Repayment terms

Repayment terms are made up of the time within which the total debt has to be repaid (repayment period) and the weekly amounts you have to pay back (repayment rates).

Repayment period

The total debt should normally be repaid in 104 weeks (2 years).

Repayment rates

There are three standard repayment rates which apply. These rates depend on your existing financial commitments.

The rates are equivalent to 12 per cent, 10 per cent and 5 per cent of your weekly

• Income Support available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Jobseeker?s Allowance available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Employment and Support Allowance available income (and including Child Benefit and Child Tax Credit where appropriate).
• or?Pension Credit (and including Child Benefit and Child Tax Credit where appropriate)

excluding any housing costs.

Repayment at 12 per cent rate

If you have no other debts to repay, you will be expected to pay an amount equal to 12 per cent of your weekly

• Income Support available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Jobseeker?s Allowance available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Employment and Support Allowance available income (and including Child Benefit and Child Tax Credit where appropriate).
• or?Pension Credit (and including Child Benefit and Child Tax Credit where appropriate)

excluding any housing costs.

Repayment at 10 per cent rate

If you have some other payments to make from your benefit, such as rent or fuel arrears, the repayment rate may be lowered to 10 per cent of your weekly

• Income Support available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Jobseeker?s Allowance available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Employment and Support Allowance available income (and including Child Benefit and Child Tax Credit where appropriate).
• or?Pension Credit (and including Child Benefit and Child Tax Credit where appropriate)

excluding any housing costs.

Repayment at 5 per cent rate

If your commitments are larger (for example, you have higher payments to make from your benefit or are repaying several personal debts) the repayment rate will normally be 5 per cent of your weekly

• Income Support available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Jobseeker?s Allowance available income (and including Child Benefit and Child Tax Credit where appropriate)
• or?Employment and Support Allowance available income (and including Child Benefit and Child Tax Credit where appropriate).
• or?Pension Credit (and including Child Benefit and Child Tax Credit where appropriate)

excluding any housing costs.

If you can repay your total debt within 104 weeks (2 years) at one of the above standard repayment rates, we will make you one offer. If you cannot repay your total debt within 104 weeks, we may give you another choice based on the standard repayment rate. We may offer you a lower amount of new loan which can be repaid at a standard repayment rate in 104 weeks.

Non-standard repayment terms

We may offer you either the full amount of your new loan or a lower amount of new loan at a non standard repayment rate. This rate can be any weekly rate, up to a maximum of 20 per cent of your Income Support, income-based Jobseeker?s Allowance, Employment and Support Allowance (income-related) or your Pension Credit (including Child Benefit or Child Tax Credit where appropriate) excluding housing costs. Again we may give you choices, based on recovery of your total debt in 104 weeks (2 years).

You may receive up to three different offer choices, from which you can choose the best one for you.

Budgeting loans

If you are having difficulty making the repayments

If you cannot make the repayments at the rate originally agreed we may be able to help, for example by extending the repayment period to reduce your payments. You should contact your Jobcentre Plus office for advice. If you are aged 61 or over, you may wish to seek advice from the Pension Service.