Our Guide to Understanding How Fast Loans Work

Flexy loans guide to fast loans
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What are fast loans?

Fast loans offer easy-access, short-term loans for small amounts of money. Fast loan lenders are more likely to accept people with bad credit scores than high street banks and can deposit much-needed cash into an account within hours of an application being made.

Even though fast loans are subject to tighter regulations that they used to be, they still have some of the highest interest rates in the lending industry and can come with strict repayment terms.

Continue reading to get all the gritty details about fast loans.

Fast Loans Facts & Figures

27% of fast loan customers would have without essentials like food & water if they have not taken a loan
80% of borrowers thought it was the only option available to them
56% found their repayments were affordable
37% would have asked friends and family if they couldn’t get a loan
6% would think about using an unlicensed lender if they weren’t approved for a fast loan
Source: Consumer Finance Association

Fast Loans: How Do They Work?

When you apply for a fast loan, you provide a lender with your basic personal information, such as your name, address, employment details and bank account. The lender uses these to run a ‘soft’ credit check, which is less strict than a full check on your credit.

This means that people with bad credit scores are still likely to be approved. If you pass the lender’s requirements, you will be able to take out a loan and have access to cash within a matter of hours. Some lenders may even deposit cash into your bank account within 15 minutes of approval.

If the sound of an instant deposit and sounds too good to be true, that’s because it is! Although fast loans can be a useful tool in tight situations, you will need to pay back the money within a short period, the average length of a fast loan in the UK is 69 days. Fast loan lenders also often charge extremely high interest rates. Combined with the short amount of time you have to repay the money, this can make fast loans difficult to repay if you don’t budget carefully.

If you are already struggling with cash flow, it is a good idea to plan exactly how you will pay for your instalments before taking out a fast loan. If you miss instalments or can’t afford to repay, you’re likely to be charged penalty fees and could easily get caught in a cycle of debt.

Britain’s Average Fast Loan Customer Is

In work
Between 18-44 years old
With kids
Living in a large household
Earns £15,600 after tax

Fast Loans: How Do You Apply?

You can apply for fast loans online or with high street lenders using your ID and proof of address. It is worth taking the time to shop around for a good deal, even if you are applying in the midst of a financial emergency.

Most lenders will be able to check your eligibility and provide you with a quote before you make a full application, so it is possible to compare deals before you apply. Unlike bank and credit providers, fast loan lenders only run a ‘soft’ credit check, which won’t affect your credit rating, so it’s safe to shop around.

Look out for flexible repayment terms (such as letting you skip a payment without fees) or low upfront fees, which could save you money overall. Once you have found a loan, you like the look of, check that it suits your budget. If you can’t afford to repay it, you’re likely to face steep penalty charges and seriously harm your credit rating, which will make it harder to borrow in the future.

Although most lenders will run a soft credit check when you apply, some advertise ‘no credit check’ loans. These lenders are not monitored by the Financial Conduct Authority, the regulatory body which sets out minimum standards for lenders in the UK.

Will Taking Out a Fast Loan Affect My Credit Rating?

Taking out a fast loan won’t have a negative impact on your credit rating unless you have problems paying it back. If you pay it back on time, it could help to boost your credit rating and make it easier to get cheaper loans in future.

However, the short repayment period and comparatively high-interest rates of fast loans mean that they can be difficult to repay if you don’t plan well. Your credit score will be negatively impacted if you are late in repaying or defaulting on your loan.

How Do You Repay a Fast Loan?

The exact terms of repayment will depend on the contract you sign with your lender. In most cases, you will be expected to pay regular instalments on your loan until you finish repaying your debt and its interest by a set date.

At the beginning of the loan, your lender might ask for your permission to set up a recurring payment, direct debit or standing order. All of these allow the lender to take funds straight from your account to service your debt.

You can cancel these at any time, but your lender is likely to charge you penalty fees if you forget to pay your instalments on time.

Some fast loan lenders may only charge you interest throughout the term of the loan, and ask for all the capital you borrowed to be paid back in your last instalment. This called a ‘balloon’ payment and will cause your last instalment to be higher than your usual monthly payments.

It is essential to check whether your payments will change at all over the term of the loan so that you can budget for them.

What Happens if You Can’t Pay Back a Fast Loan?

Most fast loans are unsecured, which means the lender cannot claim your possessions or home if you fall behind on payments (the main exception to this are logbook loans, in which you agree to use your vehicle as security).

Even if your belongings or home aren’t at risk, falling behind on payments will likely result in penalty fees- adding to your debt- and could damage your credit score, making it harder to borrow in future.

If you realise you are going to have problems paying back your loan, you should speak with your lender as they may be able to help you.

Some lenders might offer to ‘rollover’ or extend your loan. While this may seem like a tempting option, you will end paying more overall in interest and fees. For this reason, if you are already struggling to keep up with payments rolling over your loan might not help your situation.

Another option is to consult with a debt management agency. A debt counsellor will be able to work out an affordable payment plan and negotiate with the lender on your behalf.

This could have an impact on your credit score, and you may need to pay the debt counsellor, but is a proactive step towards managing your debt.

Alternatives to Fast Loans

If you are not sure whether a fast loan is right for you, consider whether any of the following options could be more suited to your situation:

Asking Your Employer for an Advance

Your employer may be willing to offer you a salary advance. In doing so, they pay you all or part of your next month’s salary ahead of time to help you out of a financial tight spot. Be careful, though: by taking an advance, you are borrowing from next month’s budget.

Borrowing From Family and Friends

If Brits who borrowed in 2015, 37% of people said they would have borrowed the money from family or friends if they were turned down for a loan. If your loved ones are in a position to lend you money, this could be worth considering. Just make sure you treat the repayments like a bank loan- you don’t want to risk ruining your relationship.

Personal Loan or Credit Card

If you have a reasonable credit rating, you are likely to be eligible for a personal loan or credit card. Although both of these options may need you to wait a few days for approval, the fees and interest rates are likely to be much lower and your repayment terms more flexible than with a fast loan.


If you don’t currently use an overdraft, it may be worth asking your bank whether they could give you access to one. If you already have one, your bank might be willing to increase it. Although overdrafts can be an expensive way to borrow money in the long term, they are flexible and have no fixed term, allowing you to pay back your debt as and when you have money.

Credit Union ‘Payday Alternative’ Loan

credit union is a community bank, which is owned and run by its members and not runs for profit. Because credit unions don’t have to follow the same rules or pay the same taxes as commercial banks, they can choose to lend to people with poor credit and may offer better interest rates than for-profit lenders.

How Can Flexy Loans Help?

Here at Flexy Loans, we have partnered with some of the UK’s leading Lenders.

They have already helped thousands of people get loans already, and they can do the same for you.

Choosing a loan broker like us (we don’t charge any fees) means our application process matches you with the best loan available to you.  All lenders we recommend are regulated by the FCA, which gives you an additional layer of protection.

To apply and see what loan is available to you, click on the below and answer the question

Team Flexy Loans
Team Flexy Loans
This article was written by multiple writers from team Flexy Loans. Our team of writers is made up of financial specialist with a combined 45 years experience of writing about finance.
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