With short term loans, UK residents get the cash they need quickly. Using the money to pay pending bills and then repaying the short term cash loan as quickly as possible results in the lowest interest payment.
This financing is designed for people who know they will have the cash on hand to repay the balance within the initial term. Anyone who does not have this ability should instead consider short term bank loans that feature a lower rate of interest.
These may be difficult to find and as stated above, they may also be difficult to qualify for, so some research and an excellent credit score are necessary.
The poor economic situation in the UK has resulted in steadily increasing prices and high general inflation. Many consumers are faced with increasing household bills, yet their income is not growing at a relative pace.
This forces them to make each pound stretch further and many have taken this to the extreme. When expenses have been reduced as much as possible and money is needed to pay bills or put food on the table, alternatives like the short term loans UK residents are offered are sometimes the best way to get a fast loan to pay necessary expenses.
Applying to a bank is the conventional process for those who need a loan. Due to the financial crisis, the ability to get a personal loan from a bank has become difficult for many people.
Lenders are scrutinizing loan applications more carefully and have tightened their criteria for approval. Only consumers with the best credit scores are approved for the loan they want.
Others are forced to pay higher interest rates or subjected to shortened repayment periods. In the end, they wonder if borrowing the money was really worth it. Unfavorable loan terms can put a financially restricted consumer into debt. The loan designed to improve the financial situation instead ruins it, resulting in long-term negative consequences.
Types of Short Term Loans
Loan lenders offer short term loans UK residents are eligible for based on various situations. Whether businesses or individuals are looking for loans, short term options are available.
These range from several days up to one year, each with a short term loan rate reflective of the amount borrowed, the loan term, and in some cases, the credit score of the applicant. Read on to learn more about each type of loan and determine which one is best for you.
Short Term Loans UK Businesses May Find Useful
Following the credit crisis, UK banks committed to increase lending to small and medium sized businesses, but they have not followed through on this promise. As a result, only the most financially stable businesses qualify for short term bank loans.
Companies that are rejected can turn to loan lenders that specialize in short terms loans UK businesses need. This money is essential for growing a company. Purchasing new machinery, investing in research and development, and expanding operations are just a few uses for a short term cash loan.
Since the amount typically borrowed is rather high, the short term loan rate is usually quite reasonable because the repayment term is longer. Businesses can find loan terms ranging from three to 25 years.
With such wide-ranging loan terms available, business owners have opportunity to repay the loan without severely affecting the financial framework of the company. There are also loans for specific types of businesses, such as loans for female-owned companies.
Even a business with a less than outstanding credit rating can qualify for a short term loan from certain loan lenders.
Unsecured And Secured Short Term Loans UK
The typical loan is classified as unsecured, meaning it is not backed by any collateral provide by the borrower. Loan lenders rely on the creditworthiness and promise of the borrower to repay the money.
This equates to the lender taking a big risk because it can never be certain that the borrower will make good on this promise. In exchange for taking this risk, the lender usually imposes a higher short term loan rate of interest than that associated with another type of loan.
Alternatively, short term loans UK citizens may qualify for fall into the secured category. With these, the borrower pledges a certain asset, like a house or car, that serves as collateral for a loan.
The debt of the loan is secured against this collateral. If the borrower defaults on the short term cash loan, the lender takes possession of the collateral and can sell it to regain a portion of or the entire amount lent.
If selling the asset does not yield enough money to repay the debt, the creditor may be able to impose a deficiency judgment against the borrower in the amount of the remaining balance.
Short Term Loans For Students
Students face many expenses in addition to tuition payments. They need cash to purchase books, supplies, and special equipment like laboratory supplies. If they are residing on campus, room and board expenses are involved.
Those living off campus have rent and utility payments in addition to the cost of food. In all cases, personal items like soap, shampoo, and other supplies are also needed. By the time these expenses are summed, the student is looking at a huge bill.
When the amount of money needed is larger than the checking account balance, a short term cash loan may be necessary because the student is not likely to qualify for a bank loan
Before applying directly to a lender, students should do some research. Some universities provide short term loans UK students qualify for without paying any interest. The amount offered varies based on the personal situation and even students who qualify for a regular student loan may be able to secure a short term loan for emergency purposes.
Documentation requires to get a same day loan from the university includes bank account statements, proof of university enrollment, a Direct Debit card, and evidence regarding the circumstances that led the student to need a loan.
No Credit Check Short Term Loans
Bad credit is often the sole factor preventing a person from being approved for a personal loan. Loan lenders look at bad credit as an indication that the applicant is financially irresponsible.
Lenders are hesitant to provide short term bank loans to anyone whose credit score falls below a certain threshold or whose credit history is tarnished with events like defaults or County Court Judgments (CCJs).
If the individual has an Individual Voluntary Arrangement (IVA) or bankruptcy, he or she should almost give up the hope of qualifying for a loan. If by some miracle the financing is approved, it will most likely come with a very high interest rate and require the borrower to do everything but swear in blood that the money will be repaid.
Short term loans UK consumers may find much more appealing the feature of no credit check. Some loan lenders specializing in these make an instant decision whether the applicant qualifies for the financing.
After completing an application online, the verdict, which includes loan terms for which the individual is eligible, is returned momentarily. Other lenders may offer instant approval, guaranteeing that anyone who applies for the loan will be approved.
Some lenders offer this only with a secured short term cash loan product. Whatever the case, the individual will not need to wait long to learn whether money is available. This shortened waiting period is something many people appreciate when they are in need of a fast loan.
An Introduction To Payday Loans
Typical payday loans feature a term of a few weeks to a month. While some consumers can repay the loan within this time, others cannot stretch their budget this far.
Rather than borrowing less than they need, they should consider an alternative. Loans with a one-year term are available online without the need for a credit check.
When consumers are unable to obtain bank financing, they often turn to payday loans. This short-term financing is designed to be repaid with the next paycheck.
Borrowers who know they cannot do this should look for other options. Otherwise, the financing will become extremely expensive when the individual must roll the loan to a new term.
Some lenders allow 12 months to repay a loan of up to £1,500. This is a more affordable and cost-effective option for many UK consumers. They will not be facing a quickly-approaching deadline and will not need to extend the initial term.
Taking up to 12 months to repay the money also offers a longer period during which credit scores can improve. After all, this is a no credit check loan so the individual must have had some credit blemishes.
The money may be used for any purpose and qualification requirements are minimal. The individual must be a permanent UK resident at least 18 years of age, have a steady job with stable income, and have an active bank account. Since various lenders offer one-year loans, consumers can shop online for the best deal.
Once a suitable loan is found, personal and employment details are provided via an online application. The lender reviews and verifies this information and makes a decision.
Applicants who are approved receive the loan via direct deposit into their bank account. By repaying the loan within the 12-month period, they increase their credit score and reputation with lenders.
Same Day Loans
If time is really of the essence, a same day, short term cash loan may be the perfect solution. Not only is the lending decision made the day the person applies for the loan, the money is also provided on that date. In most cases, it is directly deposited into a bank account owned by the borrower.
Once the transfer is reflected by the receiving bank, the money can be used for any purpose. When looking for short term loans, UK residents should identify whether the available financing features same day funding.
Anyone who needs a fast loan should only consider this option because several days are often required to provide other types of financing.
Having a bank account is the key to streamlining the funding process. Though a check can be mailed by the lender within the same day, the soonest it will arrive would be the following day.
When faced with an emergency, consumers are often unable to wait this long. They need the money almost immediately and the ability to get it within a few hours is critical to meeting necessary expenses. With a same day loan, the borrower receives the cash quickly and can apply it to the necessary expenses.
A Short Term Loan For People On Benefits
Over six million Brits are in unemployed households currently on benefits. This statistic equates to close to one in every six households within the country and costs taxpayers more than 13 billion pounds in state handouts annually.
As the unemployment rate increases and goods and services become more expensive, this population faces a particularly uncomfortable situation.
Short term bank loans are not a reality and other family members do not often have funds to spare.
Short term loans UK residents on benefits may find appealing are offered by lenders specializing in this segment of the population. Those who need a loan to cover immediate expenses may qualify for an amount of 50 pounds or possibly more if the individual can show that he or she is able to repay the money.
In general, those on benefits who are unemployed will only be approved for the lowest loan amounts.
Salaried workers might be granted 1,000 or even 1,500 pounds due to their employment status.
Applying For A Short Term Loan
Loans that feature short repayment periods are offered in stores, over the telephone, and online. Someone needing a fast loan should apply online because this is the quickest and most convenient method.
All that is required are a few moments of time, a computer, and an Internet connection. Regardless of the method used to apply for short term loans, UK residents usually must meet several criteria in order to be considered qualified. In most cases, the applicant must be at least age 18, be a salaried and employee, and have a bank account.
Some loan lenders require applicants to provide documentation proving employment and income amount. A bank statement or pay slip is usually acceptable and can often be faxed or scanned and emailed to the lender.
Bank account details must be provided so the lender can transfer the loan principal into the account held by the borrower. When a credit check is involved, the lender may request additional documentation to substantiate or disprove any information discovered on the credit report. Consumers should review their credit reports at least once per year and correct any inaccuracies.
Short Term Loan Rate of Interest And Fees
In the UK, the interest rate for a short term loan classified as a payday loan is not subject to restriction. However, payday loan lenders must publicize the effective annual percentage rate (APR).
This enables consumers to be aware of the difference between it and the short term loan rate offered by another type of lender, like a bank. Research shows that lenders offer APRs of 1,355 percent or even 2,225 percent.
If the loan is not repaid within the initial term and rolls over, the remaining balance is subject to additional interest, making the financing even more expensive. There are no legal limitations for rolling over loans within the UK.
The interest portion of the loan is often described as a fee per 100 pounds borrowed. Consumer Focus, a statutory consumer agency in the UK, reported that the cost of online payday loans ranged from about 25 to 30 pounds per 100 pounds borrowed.
During the same period, high street lenders were charging 13 to 18 pounds per 100 pounds borrowed. Lenders justify charging so much interest by claiming to experience higher rates of default and fraud on their loans. Some loan lenders impose additional charges, so consumers should read the fine print before submitting an application.
UK Short Term Lending Industry
In the UK, so-called payday loans are a rapidly expanding industry. In 2009, four times as many residents took out these loans compared to just three years earlier. Total lending in 2009 amounted to 1.2 billion pounds, represented by 4.1 million loans taken by 1.2 million people.
Loans averaged approximately 300 pounds and the annual income of two-thirds of UK borrowers was under 25,000 pounds. In 2009, about 242 million pounds in revenue was generated by the payday loan industry, which represented approximately 20 percent of UK lending as a whole.
These statistics illustrated that short term lending is a big part of the UK financing sector. As short term bank loans become more difficult to obtain, many UK residents who need a loan are turning to the short term loans UK lenders outside of High Street offer.
Though the short term loan rate of interest may be higher, individuals residing in the UK may have few better alternatives. Whether it specializes in a business or person loan, a short term lender meets a need in the UK.
Choices Regarding Short Term Loans UK Residents May Receive
Even though their financing options may be restricted to short term lending, UK residents do have some choices within this category. A large number of loan lenders participate in this market, which works to the advantage of the borrower.
By conducting an online search for lenders and comparing the short term loan rate and borrowing period of each, those who need a loan can find one with the most attractive terms.
Individuals who have damaged credit should verify that the lender will help them repair the situation. People can rebuild their credit score simply by repaying the loan on time. This may help them qualify for a larger loan in the future and eventually, they may be eligible for one of the available short term bank loans. To begin working toward this goal without spending a lot of cash, borrowers should repay the loan as quickly as possible.
In the most common arrangements, loan amounts range from about 50 to 1,500 pounds and terms span from a few days to the following payday. Money is provided relatively quickly and lenders often do not require additional documentation.
Short term loan lenders catering to the largest audience operate online and allow consumers to submit the loan application electronically. As stated above, there are many other arrangements- this is simply the most common structure.
Short term loans UK residents need are available online, over the telephone, and in stores. Though the short term loan rate of interest may be higher than that of short term bank loans, lending requirements are usually more relaxed.
Consumers may be able to complete and submit a loan application online and receive an instant approval decision, a guaranteed loan, or same day funding. This financing may be secured by an asset or unsecured, relying only on a promise to repay.
Businesses, students, people on benefits, and those with impaired credit should be able to find a short term cash loan that meets their requirements.