Find The Answers All of Your Questions
Understanding Short-term Loan Products What are small loans?
Small loans are usually a form of personal short term loan that is available to applicants who need to borrow a small sum of money to help them stretch their budget until their next payday. At Multi Month Loans, we help applicants find small loans from £100 to £5,000 to cover the costs of those unforeseen expenses, such as home repairs and emergency medical bills.
Are there different types of small loans?
There are many different types of loan which may fall under the small loan category and can be used in emergencies:
Payday loans are loans which are small sums of money which are borrowed and repaid by an applicant’s next payday. While payday loans are prevalent in the UK, these loans aren’t suitable to be used for the long-term and can be a costly form of credit if you intend to use them for this purpose.
Personal loans are a form of unsecured loan which can be taken out for periods of anything from two months to two years. These loans are generally more convenient than payday loans if you are wishing to spread out your repayments a further than a month, making the loan more manageable.
Guarantor loans are loans in which the applicant provides a co-signatory, most commonly referred to as a guarantor. Small guarantor loans are ideal for applicants who may not be in full-time employment or those who receive state benefits, as they propose additional security for the lender. As if the applicant is unable to make the repayments, then this duty falls onto the guarantor.
While these loans appear great in theory, it can sometimes be difficult for loan applicants to find friends or family members who are willing to act as a guarantor. Additional problems can also arise and have the potential to cause conflict if you fail to make repayments, as not only will this impact both of your credit scores, but it can also negatively impact your relationship.
Bank and high-street loans
If you’ve ever been rejected for credit in the past due to a poor credit score, then going to your local bank or high-street lender for a loan may not be your best chance of getting approved. Banks and high-street lenders can provide smaller, short term loans to applicants; however, their eligibility criteria might be a bit more tricky to get approved with if you’ve faced financial difficulties in the past.
If you’ve had an unexpectedly large utility bill and you’re finding it hard to pay for your essential monthly expenses such as commuting or your food bill, then you could use a small loan in the form of a credit card.
When should I use a small loan?
The best time to use a small loan is when you require a small sum of cash to see you through until your next payday or for a short time. These loans are used for, but are not limited to the following situations:
- Appliance and home repairs
- Vehicle repairs
- Emergency medical bills
- Unexpected utility bills
Do You Qualify? Am I eligible for a small loan?
We work with a panel of over 30 UK small loan lenders, each of who will have their own list of eligibility criteria that you will have to meet. However, generally, most of the lenders will expect you to be able to meet the following requirements as a minimum.
- 18 years of age
- UK resident
- Valid UK bank account
- Have a regular income of over £700
- Afford the repayments
What about if I have bad credit?
There are all manner of different reasons why an applicant may have or had bad credit in the past, so if you’re worried about applying for a loan due to your poor credit score, you needn’t worry. Instead, the majority of lenders that we work with will still consider loan applications from those who may have a poor credit rating. All applicants are considered fairly, irrespective of credit history and are accessed on their affordability and ability to make repayments.
If you are worried about being rejected for credit, you can use an eligibility checker to see whether you are likely to be approved or not. These tools use ‘soft searches’ which won’t impact your credit score but are a good indication of whether or not you are likely to be approved.
Where do I Apply? Where is the best place to get a small loan?
If you’re looking to secure yourself a small loan, then there are two main ways for you to get one. Here are your best options.
You can apply for your small loan in person by visiting your local high-street lender. Typically, a high street lender will require you to provide evidence of your affordability and income by providing bank statements and evidence of your payslips, along with valid ID and proof of home address along with your application.
While it can be reassuring to have your application handled by someone face to face, applying in person can take considerably longer for you to collect the paperwork you need and for you to receive a decision on your application.
You can also apply for a small loan online, either via a lender directly or by going through a credit broker who can compare all of the options available on the market for you.
How do I apply?
Our application process is specifically designed to be as straightforward as possible for swiftness and ease of application when time is of the essence.
To apply online with Multi Month Loans today, all you have to do is hit the apply button and fill out our application form, ensuring that all the information you provide us is correct, to give you the best chance of being approved. Once you have submitted your online application, we’ll then go ahead and run your details by our panel of over 30 direct UK lenders to match you with the best lender who can accommodate your needs.
If your application is approved by one of our lenders, your loan could be paid straight into your bank account in as little as 15 minutes*.
Will I be Approved? What happens if my application is rejected?
At Multi Month Loans, we help all manner of applicants to find short term loan products regardless of whether they’ve been turned down for credit in the past. Although we do have high approval rates, there are many different reasons as to why a lender or a broker may reject an application from a small loan applicant.
Firstly, you need to double-check all the information you provided on your application to check for errors or typos, which could be hindering your application.
If you are confident that there were no mistakes on your application, then you can ask the lender directly why you were rejected for credit. However, usually, this will be down to either one of two factors: reliability and/or affordability .
If your poor credit was a factor, then lenders could be worried about your reliability of repaying your loan, this is because lenders assess your credibility based on how you’ve handled your credit in the past. If you’ve missed or had late repayments in the past, then this could be affecting both your credit score and your likeliness of being approved. Focus on improving your credit score, which you can check by visiting Equifax.
If lenders are worried about your affordability, then they may have rejected your application on the basis that they believed you might be unable to make the repayments on the money you requested. You can check your affordability by using a loan calculator to work out the loan amount you can afford to borrow before you apply.
Frequently Asked Questions FAQ’s
Can I afford a small loan?
While we only perform a ‘soft credit check’ all of the lenders that we work with will perform a credit check and look into your credit history, and whether or not you can afford the loan, you have requested.
What is the interest like?
Small loans, such as quick loans, are regulated by the Financial Conduct Authority (FCA), meaning that all charges and interest rates are capped. The total fees of the loan are capped at 100%, meaning that you will not be able to accrue charges or interest, which is more than the loan itself.
With this type of loan, it is worth mentioning that these aren’t designed to be used for long term periods which are expressed through the representative APR.
Will a small loan affect my credit score?
By ensuring that you make your repayments in full and on time, a small loan could positively impact your credit score. However, failure to make loan repayments could end up in charges and fees, which will negatively impact your credit.
How do the repayments work?
Most of the lenders that we work with will collect payments using a Continuous Payment Authority (CPA), which you have the right to cancel at any time. If you miss a repayment or cancel your CPA, you will be able to make repayments by getting in contact with your lender directly.
Are there any additional fees or charges?
At Multi Month Loans we charge no fees for the service that we provide, however, the lender that you receive your loan with may have their own fees and charges which will be stated in the terms and conditions of the loan when you receive your loan offer.