What are small loans?
A small loan would be considered a type of financial product designed to help you out when you have a financial emergency and need a quick and easy solution. Some people may also qualify them as short term loans or payday loans.
They are usually less than £ 1000 in value and are repaid within 12 months. If a very small amount of money (say £ 100 – £ 500) is borrowed to cover a temporary cash situation, then a loan of this size could be paid off in just a few months.
When to consider a small loan?
There are a number of scenarios in which you might want to consider taking out a cash loan. If you have an unexpected bill or cash flow emergency that you didn’t anticipate, then a small loan can come in handy if you don’t have enough money in your bank account.
How can a small loan help me?
Used responsibly, a small loan can help you overcome temporary financial difficulty when you don’t have enough money in your bank account. This could help you pay for any unforeseen financial emergency, like a car repair or a broken boiler. Not being able to make large payments like these can be very stressful. It can add discomfort or inconvenience to your life if you have to wait a few days or weeks to save money when all you really want is a quick and easy fix.
When would you use a small loan?
A small loan can be useful in various situations:
- Pay an urgent bill
- Vehicle repair
- Broken boiler
- Medical treatment
- Home Improvements
Because these loans are usually only a few hundred pounds and are paid off in a matter of months, they are great for cash flow emergencies.
Saving for emergencies can be very difficult, especially when we don’t see them coming.
MoneyHelper recommends saving at least 3 months of your monthly salary.
This can be difficult to do with high living costs.
Using a low amount of short-term financing means you can fix the problem quickly and then pay off the loan (plus interest) on a structured repayment schedule.
How do small loans work?
It starts with submitting a loan application online, which is then reviewed by a panel of lenders, who will assess the affordability of your application and the potential risks of default.
Applicants must be over the age of 18 and reside in the UK. It is essential that customers earn a regular income (full time or part time) which is deposited into a UK bank account with a debit card attached.
Applicants must have a valid email address and mobile phone number. This helps to ensure that you can be easily contacted and to speed things up as you can often digitally sign the loan agreement upon acceptance.
Finally, customers must have a functioning debit account, with an active debit card to receive payments into their account. Collections can then be made by the lender using a system called continuous payment authorization.
How to apply for a small loan?
At CashLady, we make it easy to apply for a loan.
Online loan application can be done through your mobile device, tablet or internet enabled computer. There are many providers of lower value credit products and direct lenders and brokers can offer you a solution online.
Typically, an online application form will ask you for key information about yourself and your spending habits. It’s important to be as honest as possible to make sure you don’t make mistakes or provide incorrect information. If you do, it could impact your chances of success.
It normally takes between 3 and 5 minutes to complete an online form and a decision should be rendered in less than 3 minutes.
Apply with CashLady
At CashLady, when we process your request, we show it to our panel of lenders. We then match you with the loan provider most likely to fund your application.
We are very strict with the lenders we work with. We only work with those who follow responsible lending guidelines. All of our lenders are licensed and regulated by the Financial Conduct Authority (FCA) and are committed to treating clients fairly.
How quickly do I have to repay my loan?
If you take out a loan, it must be repaid according to the repayment schedule detailed in your loan agreement, like any other type of credit agreement. The good news is that you can almost always make prepayments or additional payments to prepay your loan (but be sure to check with your finance provider for additional fees this might entail). This means that you will be able to pay off your loan sooner and demonstrate your creditworthiness to any future credit providers you may be dealing with. Check the terms and conditions received from your lender to understand their specific policies.
Am I eligible to apply?
Anyone can apply for a loan online. If you are looking now, you can complete our online application form and receive a quick loan decision from one of our lenders. If successful, they may be able to transfer your funds the same day.
How much will my loan cost?
The cost of your loan will depend on the offer you receive from the credit agency. Most small unsecured loans have a higher interest rate than conventional personal loans because they are designed to be taken out for shorter periods.
What is the interest rate on a loan acquired through CashLady?
The representative APR on loans found through CashLady is 49.9% APR.
This means that 51% of applicants who obtained a loan using our service did so at this rate or a lower rate. However, the rate you qualify for will depend entirely on your personal circumstances. You may be presented with a loan from a high cost short term credit provider, in which case the interest rate would be over 100% and for some lenders could exceed 1000%.
However, the Financial Conduct Authority (FCA) has put price caps in place. These price caps mean you’ll never pay more than 0.8% interest per day.
The interest rate is only part of the equation when calculating the cost of borrowing. When you receive a loan offer, look at what you will pay off each month and / or over the life of the loan. You will then be able to understand how much your loan is costing you each month.
How Do Small Loans Affect Your Credit Score?
If you take a small loan and pay it off in full and on time, your credit score shouldn’t be affected.
In fact, it might even benefit your credit score, as lenders and credit bureaus should view this type of money management and financial discipline as a good indicator of confidence.
However, if you take out a loan and don’t pay it back in full or on time, you can be viewed very differently. Not making your loan payments on time could negatively affect your credit score, making it more difficult to obtain credit in the future.
What Are Small Loans For Bad Credit?
These are smaller value credit products designed for people with low or no credit scores. Because some people have a lower credit score, they may be considered riskier to lend than others. Therefore, a loan product with a higher interest rate offers a certain element of protection for lenders who wish to expand their customer base and help people with lower creditworthiness. We have a number of lenders in our panel who are able to offer short term or payday loans for bad credit.
What types of small loans are available?
Although smaller, unsecured online loans are quite common, they are not the only type of low value loan available.
Other credit options include:
- Logbook Loans
- Guarantor Loans
- Credit lines
- Credit card
Whatever type of credit you are considering, make sure you understand what your obligations are and what the true cost of borrowing is.
Despite their convenience and ease of use, small loans should not be viewed as a long-term financial solution. They should be used sparingly and in emergency situations. Ultimately, these loans remain short-term solutions.
If you are having financial difficulties, it may be useful to seek advice from organizations such as MoneyHelper or Stepchange.
Everyone has cash flow emergencies from time to time and if you don’t have enough funds or don’t have family or friends who can help you then applying for a loan through CashLady might be an option. appropriate.
It is also important that higher cost loans designed for short term needs are only used to cover immediate and unforeseen expenses and not for more frivolous purchases.