Small Loans – Everything You Need to Know
When you hear the word “loan”, you might think about borrowing a large sum of money. But this isn’t always the case, especially as there are a wide range of loan types available in the market. While long-term loans like housing loans or car loans are standard options, there are more specialized types of loans that are designed for a specific purpose. Small loans belong to that special category.
Small loans offer a quick and accessible alternative for those who are in need of urgent cash, or to make ends meet. The access to extra cash will allow you to cover unexpected expenses such as medical bills, car repairs, or minor house repairs. You can use the funds to cover for those immediate expenses while you wait for your next paycheck.
By definition, a small loan is any loan that provides you with a small amount of money (typically no more than £5000 and often starts at £100. Another common characteristic of a small loan is that it is paid in monthly installments. The amount you pay per month is typically no more than 5% of your monthly income.
Do not confuse small loans with payday loans because these two are largely different. Unlike payday loans, small loans do not have to be repaid within a short amount of time, such as one payday cycle. Depending on the amount you borrow, the repayment period can go up to 6 months. You can also expect fixed monthly payments. In some cases, lenders charge a one-time fee and no longer add interest to the loan. It varies from one lender to another, so it is best to compare the policies before you choose a lender.
The loan terms in a small personal loan are also more favorable to the borrower than a payday loan is. Aside from a longer repayment period, the APR is not as high. The average APR for small loans start at 7% to as much as 35%, which could vary based on your credit score or other qualifications. Use this range as an idea when doing your comparison for loan providers online. This will ensure that you can get fair and reasonable rates and loan terms rather than being preyed on by scrupulous lenders.
While the interest rates are not as high as payday loans, they are still higher than traditional loans. This loan product is best reserved for those emergency cases or when financial crisis arise. The accessibility of the loan makes it easier to access them for those emergency circumstances. This is an important thing to remember when you want to avoid going into deep debt trouble.
This type of loan is not available through traditional institutions like banks and other major credit institutions. But you can find them through online lenders in the UK. You can shop around with the help of a loan broker like Money Pig. We have an extensive list of lenders that we are affiliated with and we can help you identify which lenders are ideal for your financial circumstances.
Questions on Small Loans in the UK
Are you looking for small loans lender in the UK? This is a list of the commonly asked questions that you might encounter during your search:
- What is a small loan?
- How to choose the right small loan for me?
- Does taking out a small loan boost my credit rating?
- Do people with bad credit qualify for a small loan?
- Can you get small loans approved fast?
- Is it expensive to get a small loan?
- How can I get a small personal loan?
- Where do you get small loans?
- How can I get a small loan with no credit?
- Can you qualify for a small loan without a job?
- Can you get a small loan without a credit check?
- Can I get a small loan with low income?
- What is needed to qualify for a small loan?
- How do you identify and avoid predatory small loans?
- What is the difference with installment loans and small loans?
- What are different types of small loans?
- Why look for small loans online?
- Does Money Pig help with small loans?
- Where can I find help with debt assistance?
Small loans are self-explanatory. It is a type of loan that is offered at small amounts and is typically repaid over a short period of time. This type of loan is designed to provide additional finances during times of emergency, or when you run short of your funds to make it to the next paycheck.
In general, small loans are classified under short-term loans. It offers a quick yet convenient way to gain access to cash. The processing and approval of the loan is typically faster than conventional loans because of the relatively small amount that is involved. The repayment period is typically a few weeks or the next payday cycle.
Small loans, like most other small loans, can be customized to suit your unique needs and preferences. This type of loan, therefore, gives you the freedom to choose a loan that is right for you. Most small loans will give you the flexibility to choose the amount you want to borrow and a flexible repayment plan. Most lenders would be willing to accommodate the needs of their borrowers to ensure that they can handle payments.
A common feature of small loans would be a short repayment period. But you can expect the repayment term to be quite flexible, too, unlike payday loans. To get the most favorable terms, you can discuss with your chosen lender about your options.
Yes, it does, but only if you are diligent enough to pay your loans on time. The advantage with taking out a loan is that it gives you the opportunity to build credit. Make sure that you pay your loan on time and that you can pay it off within the repayment period for the loan. If not, it is reported to the credit bureaus and you can hurt your credit score in the process.
The only way to boost your credit rating by taking out a loan is if you pay it on time. A good repayment history will improve your chances of qualifying for a loan in the future.
If you have bad credit, your options for getting a loan are limited. This is true when you apply for small loans, especially if you are applying for unsecured personal loans. But thankfully, there are a growing number of lenders in the UK, some of which are considered specialist lenders. The latter are a group of lenders who cater to people with poor credit history.
If you want to get a small loan with bad credit, you have to find lenders that specialize in short term or payday loans. They are more forgiving than other major credit institutions. Even if you have a low credit score, you can still qualify.
It varies from one lender to another as each one have different processes. However, small personal loans entail a small amount so you can expect the procedure to be less stringent. Some lenders can even release the funds within 24 hours, provided that you submitted all the necessary documents.
Yes and no. One of the most common misconceptions about small loans is that they (annual percentage rate). But this is not always the case. The great thing about small personal loans is that they are not borrowed over a long period of time, so you can repay it fairly quickly. The sooner you can pay it off, the less interest you would have to pay.
In fact, you can even find lenders that charge a one-time fee rather than adding an interest rate to the loan. This means that you can borrow a specific amount and would have to pay a fixed rate rather than paying more on interest over time.
The great thing about paying a one-time fee is that the fee is charged upon the release of the funds or the signing of the loan contract. You can expect full transparency in the process and you won’t have to worry about any other hidden charges.
The first step is to find a lender who offers small personal loans or other similar kinds of loans. There are many lenders in the UK to choose from and it can be hard to decipher which ones offer what types of loans. You can tap the help of a loan broker to simplify the search and also streamline the process of successfully getting a loan.
Small loans are provided by lenders who specialize in short term loans. You can do a quick online search for them or work with a broker. Once you can find the lender, make sure you check their eligibility requirements and provide the documents needed. If you have supplied all the necessary documents and you meet the minimum criteria, then you have a high chance of getting approved for the loan.
Getting a small loan with no credit is extra challenging. Without any existing credit or history, you are viewed as a risky borrower by the lender. The reason for this is because they have no information to base the history of repaying debt from. Without a credit history, they have no way to assess if you can repay the loan or not.
While it might be difficult, getting a small loan with no credit is not impossible. There might be lenders in the UK who would be willing to offer loans for people with no credit, as long as you can provide proof of income.
Even if you are unemployed, you can still qualify for a loan. There are many loans out there that are targeted towards individuals who are unemployed. But applying for a small loan without income can be challenging and it will depend upon the lender’s assessment of your personal and financial information. You can apply for a loan but you won’t be guaranteed of approval as there are many other factors that come into play.
No. All lenders in the UK that is regulated by the FCA are required to perform a credit check on all loan applications. Be wary of lenders who offer to give you a loan with no credit check. Make sure you choose only reputable lenders who operate legally. A no-credit-check loan might be very attractive especially among those with poor credit score.
Yes. Most small loans are typically low in amount, too. Even if you have a low income, you can still qualify for a loan, depending on the amount you want to borrow and your credit history. Income is not the sole factor that is evaluated by lenders upon submission of your loan application.
If you are interested in borrowing via a small loan, there are a few qualifications that you have to meet. The first factor that is evaluated is your credit score. The higher your credit score, the higher your chances of approval.
Aside from your credit score, you must also provide proof of income and employment. Having a steady source of income will improve your chances of successfully getting a loan as it means you have the capacity to manage monthly payments. Some lenders will require collateral or co-signer, but if you meet the above two qualifications then there won’t be a need for any of these.
Small loans are easily accessible and are sometimes offered to those who have bad credit or no income. For this reason, there are many lenders who prey on the people who are looking for this type of loan. Knowing that these borrowers have limited options, they capitalize on that and take full advantage of the situation.
If you are a borrower with bad credit or low income, be very cautious when looking for small loan lenders online. It pays to learn about the prevailing interest rates on small loans. When you know the average rates offered by lenders, you will know when an interest rate that is being offered to you is too high.
A tell-tale sign of predatory lenders are those that offer limited amount with excessive terms and interest rates. By charging astronomically high interest rates, the lender is able to make profits off of the interest payments. One of the common ways to spot a predatory lender is if they do not perform credit check prior to approving your loan. The FCA stipulates that credit checks are mandatory for all loans, no matter how big or small.
You should also be wary of lenders who do not disclose the APR until after you have signed the loan. And finally, refrain from giving any lenders access to your bank account. These are common practices of predatory lending.
There are subtle yet significant differences with installment loans and small loans. An installment loan typically requires you to provide collateral. This can be in the form of a car title or anything of value. By giving your collateral to the lender, you are also assigning them right to repossess your items in the event of late payments or if you are unable to pay the loan at all. From there, you can make monthly installment payments on your loan until such point that you repay the entire amount. When the loan is fully paid, you can get your car title or any collateral back in your possession.
A small loan works differently because not all small loans require collateral or a co-signer. If you have a positive payment history and a steady source of income, you will most likely be approved for a small amount. Since this is a small loan, you can expect to borrow no more than £1,000 (or a bit more, depending on the lender). If you need more than this amount, you might want to consider other types of loans. However, you can expect that the qualification requirements will be more stringent, too.
When you talk about small loans, there are a few other types available to choose from. Whatever the type of loan you choose, it is a simple and straightforward way to get the money when you need it. The terms and fees can vary from one lender to another.
The first type is known as unsecured small loans. This type of small loan is granted based on your income or credit history. These two factors are evaluated by the lender to determine if you can afford to repay the loan. The amount that you can borrow with an unsecured loan is typically smaller than other types of loan that are more secure.
The next type of small loan is known as the secured loan. This is different from unsecured loans because you need other ways to secure the loan, especially if the credit and income requirements are unsatisfactory. With a secured loan, you can offer something of value to the lender (also known as collateral). This can be a car title or your home. You can leverage the value of these possessions so you can get better terms, interest rates, or even qualify for a higher amount.
If you have no item of value, then another way to secure this loan is to get a co-signer or guarantor. That individual that you get to co-sign the loan must be in good credit standing.
The availability of small loans online has made it possible for borrowers to get the cash they need during times of emergency. If you need one, you can go online in search of the lenders who can provide the money that you need.
There are many advantages when you search for small loan lenders online. The first one is the convenience. It is easy to gather information and compare your options using the tools of the internet. When you search online, you can also work with loan brokers like Money Pig. It is our goal to find small loan lenders that can meet your specific needs and circumstances. You do not have to worry about hidden fees or other charges, especially if you work with lenders who are regulated by the FCA.
Yes. Money Pig is a certified loan broker in the UK and we can work with all kinds of loans and lenders. If you are specifically looking for providers of small loans, we can help speed up your search. With our comprehensive panel of lenders, we can point you towards the right direction in your search for certified lenders.
In fact, we recommend working with a loan broker if you are looking for small and short-term loans. This is how you can ensure that you work with legitimate lenders instead of falling prey to predatory short term loan providers.
If you are in debt and would need help sorting out your finances, there are plenty of ways to get the assistance you need. You can visit Money Advice Service, Step Change, and National Debt Line and get free advice about your debt struggle. These resources can facilitate in helping you get back up on your feet financially.