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These loans explained What are Quick Loans?
If you've found yourself with an important or urgent bill that you can't afford to pay, then you might be wondering where you'd be able to find finance to cover the costs on such short notice. Whether you've planned for rainy days or not, you don't usually have the time to wait around in an emergency, so you're probably wondering what your options are for obtaining quick and easy credit, fast.
What is a Quick Loan?
These loans are a form of short-term finance, which allows you as the borrower to obtain enough credit to cover the costs of any one-off problems or temporary money problems that may crop up suddenly and unexpectedly when you have little funds to cover the costs. These loans get their name from their quick and straightforward application process, as most applicants who apply for a quick loan can have their application accepted within just minutes of applying and receive their funds the exact same day that they're approved.
How do I apply?
The majority of loan providers will provide an application form for you to apply online, although alternatively, some lenders will also allow for you to apply both via telephone or through a loan agent/officer if you aren't internet or computer literate.
What information will I have to provide?
Upon application, you can expect to provide the following information:
- Date of birth
- Email address
- Employment status
- Employment details
- Home/mobile telephone number
- Annual income
- How often you get paid (weekly, monthly, annually)
- Marital status
- Number of dependents
- How much you would like to borrow
- For how long you would want to spread out the repayments
Take your time, don't let the urgency of your financial situation push you into making a poor decision.
How long will it take?
The application procedure for this type of loan is efficient and the whole process takes place in less than an hour. To apply for credit, all you will need to do is fill out an online application form and provide some personal information regarding you and your finances.
The time frame for approval can vary, but as the entire application is dealt with swiftly, with no need for any complicated questions or long-winded paperwork, you can expect your application to be reviewed as soon as possible and for you to receive your decision more or less instantly.
Moreover, as long as you follow all of the lender's directions and provide what is asked of you, you should be able to obtain your funds the same day as you have your application approved.
How much can I borrow?
With this form of credit, you’ll find that you should be allowed to borrow around £300 to £5,000, which will be enough to cover any temporary or emergency costs that you are currently struggling with. However, this will be dependant on your lender and your current financial circumstances.
Every lender will have their own limits on how much you'll be able to borrow. The loan amount available to you will also depend on how much you can afford to repay. The affordability checks that lenders carry out will help identify how much you can afford to pay back each month and the figure you can borrow will be based on that sum.
As well as this if you happen to be a first-time borrower or a new customer with some loan companies, then it isn't unusual for the loan company to cap their loans at around £2,000. Once you've used their services and proved that you're a reliable and responsible customer, they'll then allow you to borrow more your next time.
A credible loan company will never let you borrow more money than you can afford to pay back, and you must take interest into account when calculating how much you can afford to pay, as you will have to pay interest in addition to paying off your loan.
It is essential to ensure that when you calculate how much money you can afford to take out, by taking into account things such as household bills and the general living expenses of you and your family. If you know that you can comfortably pay all your debts and any additional interest, then good news, you can afford the loan!
If you would like to calculate how much credit you can afford to borrow, then try using the online calculator tool that many lenders supply on their on their websites. This will help you to get a comprehensible idea of what sum you can afford to borrow and the type of repayments you'll be able to make each month.
What can I use these loans for? What are The Uses of Quick Loans?
Quick payday loans are an easy way to obtain short term credit, which means that this quick cash loan can be a helpful solution for you to help bridge the gap until your financial situation is better. Although these loans are an excellent and convenient solution for people with one-off or short-term needs; they won't always be suitable for everyone. If you are considering applying for a loan, then it's vital you ensure that you understand what you're getting yourself into.
Who uses them and what are they used for?
Although these loans are efficient and convenient for many, unfortunately, they're not suitable for diversification of needs. Therefore, it is essential to access your circumstances in order to make an informed decision on whether or not a loan of this sort is ideal for your needs. So, if you're in a rush to obtain credit by using this loan for one of the following reasons, then these loans could be the perfect solution for your money troubles.
- Temporary cash flow problems - If you, your partner or someone in your household has had time off work due to illness or redundancy and hasn't been paid, then you might require some extra funds to help pay the household bills for that particular month.
- Emergencies - If you need extra funds to pay for a one-off bill, such as an emergency medical bill or a car repair, then you could take out a quick personal loan to cover the costs of the total amount or for the repairs.
- Avoid additional bills or fines - If you want to avoid occurring a late repayment charge on already existing debt and you're worried about receiving a negative entry on your credit record, then you could take out a loan to bridge the gap between when your bill needs to be repaid by and your next payday.
- Holiday expenses - If you're going on holiday and you've already spent your budget on just the flights and accommodation alone, then you could take out a loan to provide you with some extra cash for spending money or in case of any emergencies which could occur.
- Improving your credit - These loans can even be taken out if you want to improve your credit score. However, you must ensure that you are committed to and will be able to make all of your loan repayments. If you are able to make your repayments, then you will succeed at giving your credit score a much-needed boost. However, if you are unable to make your repayments, it could have the opposite desired effect, which is always something you should be sure to consider.
If you are considering applying for a loan, it is essential you understand what you're getting yourself into, and it's important to ensure that you're getting a loan for the right reasons.
Do you have what it takes to qualify? Could I be eligible?
Every lender who provides these loans to their customers will each have their own different lending criteria which you will have to qualify for. Most lenders will happily state on their website the main guidelines and minimum requirements that they will expect you to have, in order to be likely for approval. If you want to stand yourself in good stead then here's some extra helpful information on what you'll need to have to be eligible for this type of credit.
Am I eligible?
Every lender who offers quick loans will have their own specific lending criteria which you may or may not qualify for. However, generally, as an absolute minimum requirement, the lender will expect you to be:
- At least 18 years old or older
- A UK resident (if you're applying for a loan in the UK)
- In full-time employment or with an income of at least £800 per month
- With your own UK bank account
Undoubtedly, it is difficult to know everything that a lender expects from you as a borrower, due to the fact that many lenders will also have additional criteria in addition to the minimum requirements. However, if you can meet these minimum requirements and provide an impeccable credit record, you’ve got a great chance of being accepted by most lenders.
Will I need collateral?
Many borrowers worry about collateral, especially if they’ve got bad credit as they've heard stories about lenders seizing assets when borrowers were unable to pay back the total amount of their loan. With a quick cash advance, however, you do not need collateral as a requirement for security to ensure that you make your repayments. Instead, all that lenders will require as security is evidence that you can afford to repay the loan which can be proven through an affordability check or by bank statements.
Can I still get this type of loan if I'm unemployed?
Although many lenders will expect applicants to be in full-time employment, this doesn't mean that you won't get a loan if you're unemployed.
These loans in the UK are available to anyone over the age of 18 with a steady income. This income doesn't necessarily have to come from employment; it can also come from government benefits or spousal support. The lender you take out your loan with will require that you submit copies of your bank statements, income reports and any information about your awarded benefits that you can provide during the process.
The same circumstances and guidelines will still apply to you, and you must be able to provide evidence that you can afford the loan that you are taking out. Some lenders may offer you a limited amount of money because of your employment status, and you may find that your interest rate is higher when compared to someone in regular full-time employment.
Can I still get a loan if I have bad credit?
Yes, it is possible to get a loan even if you have bad credit, so if you’re worried about credit checks, don’t! In fact, these loans can be an excellent solution for those who are struggling to get credit. This is because they have higher approval rates in comparison to other types of loans which make them more accessible to those with bad credit, as the lower values and shorter repayment terms mean that these types of loans are ideal and considered to be less risky than other forms of lending.
However, this doesn't mean that quick cash loans can be provided to just anyone, as all lenders in the UK are authorised and regulated by the FCA and are therefore obliged to check each customer's affordability to ensure that they can afford a loan. Lenders will check your credit rating when you apply, and by doing this, it will enable the lender to view your current financial position. Any recent debt problems will present more of an issue than those that are firmly in the past. If you've got a history of late or missing repayments or had a CCJ issued in the past, you are still likely to find yourself a bad credit loan.
However, if your money problems have occurred relatively recently and weren't isolated incidents, then you may find it more difficult to get approved for a loan. This is because lenders look at different factors to establish a picture of your current financial position. If these indications show that you're not keeping up with your existing financial commitments, then lenders are unlikely to believe that it is ethical to allow you to accquire more cash.
Therefore, there is no black and white answer to whether a bad credit history could prevent you from taking out a loan, as it is dependent on your individual circumstances. However, if you can afford the repayments and your bad credit loans are firmly in the past, you stand a better chance of being accepted with more specialised and accommodating lenders.
Always check your eligibility chances before you apply for a loan. You can do this by using an eligibility calculator, such as the one available at Money Saving Expert.
Always check your eligiblity chances before you apply for a loan. You can do this by using an eligibility calculator, such as the one available at Money Saving Expert.
Find out what a lender could offer you What can I expect from Lenders?
After finding out what credit lenders tend to look for in their potential customers, you're probably wondering what you should look for in a lender that gives a clear indication as to whether they're reliable and willing to give you a deal or not. Well, we’ve comprised a list on things you should look out for, so here's a list of things that are essential to look for in your search for your next lender.
What should I look for in a lender?
When looking for a lender, you want to ensure that your lender is looking out for the possible best deal available to you and your best interests by essentially offering you the best deal and service that they have to offer, so it's crucial that you find yourself the best lender you can. Here are some essential things you should look for in a lender.
A trustworthy lender will never encourage a borrower to take out a large loan that they wouldn't be able to pay back. Neither would they persuade them to take out a quick credit for an improper or long-term purpose, knowing fully well that these types of loans aren't designed for it, as this has the potential to end in financial jeopardy or a short-term loan cycle. So, make sure you're aware of pushy lenders and be mindful of both what you can and can't afford.
Companies differ in what deals they're offering and whom they're advertising their deals to, whether that be old or new customers. Therefore, it is essential to look and compare different lenders to see what they're offering in regards to deals, APR and loan terms. That way you'll always have peace of mind that you know you've got yourself the best deal.
You always want to make sure that you are protected in the unlikely event of an altercation between you and your lender. Therefore, it is vital that you protect your finances and your rights by making sure that you before you agree to anything, the lender is regulated by the Financial Conduct Authority. This ensures that lenders adhere to a code of conduct which ultimately sets out to protect the rights and best interests of customers.
In addition to interest it's not uncommon for lenders to include some hidden fees. Be sure to read all the terms and conditions, ensuring you don't just skim through and sign. You'll be more likely to uncover any hidden fees if you always double check.
Look out for Penalty Charges
If you believe that your circumstances are likely to change during the repayment period and that at some point you may wish to pay off your loan in full, then you must check if your loan provider charges an 'early redemption fee.'
Ensure you're aware of what charges your lender can inflict, and that way you will be able to steer clear of high additional fees by making sure that you're aware of them. The same applies to late payment fees; it's always necessary to check this, as there may be one time you might not be able to make a repayment. Ensure you can comfortably pay your loan and any additional charges before you agree to anything.
Reasonable Conditions of The Loan
When you're looking for a lender to get a loan with, it's important to make sure that you always read their T&C’s before you even consider agreeing to the loan.
In the loan agreement, you can expect to find all the following information in regards to your loan, including things such as:
- The loan amount
- The APR rates you'll pay
- How much you'll pay in full
- Your loan repayment agreements
- Information on overpayment and repaying your loan early
- Consequences of late and missing payments
- Information on your rights to withdraw and the cooling off period
It is essential to read and understand all of this information they have provided you with, as failure to do so could mean that you end up agreeing to something that you were not already aware of and are unprepared for.
Sensible rates of Interest and APR
Information about your interest rates, charges and APR will usually be found in your loan agreement terms. It is essential to check this as these charges, fees and APR as this could severely impact upon your affordability if they are high. Ensure you can comfortably afford to pay the APR and interest rates in addition to any additional charges should they ever arise during your loan term. If you can't afford it, then it's a clear indication that the loan isn't for you.
The way a company deals with negative reviewers will be able to give you an indication of what type of company they are. If they argue, blame or ignore unhappy customers, then you should probably stay away. A reputable loan company will always seek to resolve any problems with unhappy customers.
Ensure you get the best rates How to Get the Best Deal Possible
The most common question people ask when getting any loan is 'How much will it cost?' You don't want to pay a lot of interest on your credit if it isn't necessary and you can get a better deal elsewhere. You need to ensure that you're getting the best deal possible when searching for what companies have to offer, so follow our advice and get the best possible deal!
Get the Best Deal
Make sure you compare the market and utilise all the tools that are at your disposal. As well as checking price comparison websites, make sure that you also go to lenders directly, as some lenders don't always advertise their products on price comparison websites. APR's are also a great way of comparing loans, as although you may not be offered that specific interest rate, they can give you a exellent indication of what you can expect to pay in addition to your repayments.
If your credit history isn't great and you feel that potential lenders could view your current financial situation as quite precarious; then you may not present enough security for the lending company, which won't dampen your chances of being accepted but could limit the amount you can borrow.
So, ensure you consider the following before accepting or signing a loan agreement
- Can you repay the loan early without penalty if you wanted to?
- Does the lender have positive reviews on a reputable website such as Google and Trustpilot, and not just on their own site?
- Can you manage your loan and repayments online?
- How much are their late repayment charges and additional fees if they have any?
- Are they authorised and regulated by the Financial Conduct Authority?
- Do they have a registered office?
- Do they have a company registration number?
Each lender will have their own limitations on how much you'll be allowed to borrow. If you're a first time borrower or a new customer, then it isn't unusual for the loan company to cap their loans at around £2,000. As soon as you're able to prove your a reliable customer, they'll allow you to borrow more.
Before you apply Additional Information to Consider
After reading all of the practical information we have provided you with, you should be able to make an informed decision as to whether your financial situation would benefit from this form of credit. If you have decided you would like to pursue a fast loan for your money problems, then you may want to read the following section before you go ahead and apply.
Advantages and Disadvantages
These loans are different from traditional and long-term forms of finance and are only useful in short-term circumstances. Therefore, it is essential to be fully aware of both the advantages and disadvantages of quick loans so you can decide whether or not a this loan is the type of finance that you're looking for.
- Easy to apply to as they have a short application process which means that you won't have to fill out loads of paperwork.
- You'll receive your decision instantly and, in most cases, you'll receive your funds within one business day of being approved.
- You’ll have the opportunity to accquire smaller sums to suit your short-term needs perfectly.
- You'll also have a short repayment period, so you don't have to worry about paying off the loan for years to come.
- You've got a higher chance of being accepted for a quick loan than other types of credit, even if you have bad credit or are unemployed.
- They're perfect for helping to make ends meet until your next paycheque.
- These loans are fully regulated in the UK by the Financial Conduct Authority.
- Available round the clock, as many loan companies offer a 24 hour a day, seven days a week application access, for whenever you may need it.
- They can be the perfect loan if you're new to borrowing credit.
- Only relatively small sums can be borrowed, therefore making them unsuitable for large one-off payments such as cars or long-term financial problems.
- Short repayment term periods, so if you're hoping to even out the cost of the loan out for more than a couple of years or so, then this may not be suitable for your requirements.
- Fees and penalties can be applied and charged by loan companies for late repayments and early repayments.
- They can tend to have much higher rates of interest in comparison to typical and traditional forms of lending such as bank loans and credit cards.
- It can be easy to fall into a cycle of borrowing, as you can end up relying on short-term credit, and the fees can end up being very expensive.
- Only you can decide whether this is the correct loan for your needs and circumstances, so you'll need to consider all of the factors mentioned above before you can make an informed decision.
In conclusion, quick loans are an excellent financing solution where you need an urgent supply of cash for a one off or temporary problem, where other credit and financial options aren't available or fast enough.
How much will borrowing cost?
The cost of this types of payday loans can vary from lender to lender and are dependent on the rates of APR, interest and any additional charges you may receive. However, on average you can expect that companies offering quick and payday loans will charge interest of around £25 for every £100 that you borrow. So, if you acquire £200, you can expect to pay the loan company around £250 in total.
How do I repay?
Borrowers are usually required to pay back the loan in a period of a month to up to two years depending on the agreement. Some payday loans have shorter repayment periods of anything from just one month and are usually settled in just a single instalment.
Your lender will collect your payment, and they will debit your repayment sum including any interest and additional monthly fees from your account each month on your prearranged date.
What happens if I can't make a repayment?
If you take out a loan then your lender will take your repayment straight out of your bank account, however, if you do not have enough funds in your account, then they have other ways for lenders to get their money back. They will either keep trying to debit the funds from your account until they get the money.
Alternatively, if you had a guarantor when you first took out the loan, then they will take the money you owe from their account and either way you will still occur a late payment charge because of this.
Checklist before you apply
You will find that these loans can be an excellent financing solution if you find yourself in a situation where you need a vital source of money and other options are not available or suitable enough for your needs. However, before you opt for a loan, you need to be aware of the circumstances surrounding such a financing option. It is therefore essential that you consider the implications of a loan correctly and that you complete this checklist we've comprised before you sign that agreement!
Do your research
- This will ensure you're getting the best deal.
- It will also provide you with the satisfaction of knowing your lender is genuine.
- It will also ensure that you've understood and familiarised yourself with their terms, conditions and all the information supplied.
Look at your own credit file
- Ask yourself 'What would a potential lender think?' By looking at your credit score.
- Ask yourself whether you could improve your score.
- Ask yourself if all the information on the file is correct.
Consider your own financial situation
- Make sure you can afford the loan and the repayments without missing any.
- Take other bills and expenses into consideration when calculating affordability.
- Make sure you're likely to be accepted before applying.
What not to do
- Do not make multiple loan applications to different loan companies in a short space of time
- Do not accept any loans terms that you haven't read or that you don't understand
- Do not let anything or anyone force you into a loan that you can't afford to pay back
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Things to consider
- It isn't uncommon for people to take out quick payday loans, only to realise they don't have enough money left to cover both their loan repayments and their cost of living. In this situation, the most significant risk is that you may enter a vicious circle if you attempt to use them as a long-term financing solution. This is unsustainable because this form of financing can be expensive. Therefore, to continue obtaining this type of finance if you are repeatedly when you are having financial troubles increases your chances of falling into a borrowing cycle. Be wary of this cycle as it can end up being a costly form of finance and you should always try to plan ahead and budget to avoid this.
- Only you can determine whether or not fast loans are suitable for you, depending on your specific financial situation and what your needs are. If you're in an otherwise good financial position and are just strapped for cash at this precise moment, then you'll know that you're financially secure enough that you may be able to afford a quick loan. If, however, you know you could be at risk of not paying off your loan and then needing another loan to support yourself, you may be better off with a different long-term financing solution, but are instead a quick fix that can come in handy.
- Although you may be anxious about getting yourself a loan as soon as possible, don't let anything such as your circumstances or a lender force you into making a poorly informed decision about a quick loan. Make sure you do your research, compare deals and always ensure you read the terms every lender provides you with. This way you'll eliminate any nasty surprises in the future. You're only set to benefit from the time and consideration you've spent on your quick loan decision.
Next Steps to take
After you have considered all of your options and the information that we have provided you with, you should be able to make an informed decision on whether or not a short-term credit option is the best bet for your finances! Apply now!
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