The Internet has opened up the quick loan same day market, especially for those with bad credit.
The ability to literally apply online and receive approval almost immediately, with funds often deposited within 15 minutes, has prompted significant growth in what are sometimes referred to as payday loans.
What Is a Quick Loan?
A quick loan is best described as a form of short-term credit which tends to be used in cases of emergency as a consequence of unexpected expenses. You will often hear quick loans referred to as payday loans which are to all intents and purposes one and the same.
Interestingly, while the term quick loan suggests just a matter of days or weeks, due to changes in UK regulations, payday loan companies can actually offer loans up to 12 months in duration.
Would I Be Eligible for a Quick Loan?
Quick loans tend to be targeted at those with limited assets and very often a chequered financial history – reflected in their credit rating. However, even if you have a bad credit rating, this does not necessarily bar you from quick loans.
Indeed, as long as you can prove a degree of regular income, there is every chance your loan application would be approved.
The basic criteria for a quick loan are as follows:-
- Aged over 18
- The applicant holds a UK bank account
- Details of monthly expenses
- Evidence of monthly income
- Provide the name of employer
- Confirmation they are a UK resident
- Have their debit card details to hand
You will notice that there is no mention of difficult credit ratings, although legally all regulated loan companies in the UK are obliged to carry out a credit check.
As long as there is evidence of regular income near a bad credit rating should not necessarily scupper an application.
Are Quick Loans Secured or Unsecured?
The vast majority of quick loans are unsecured, which is the reason why the applicant needs to provide evidence of regular income and their employer details. The more chequered financial history the applicant has, the higher the interest rate they can expect to pay.
This is a simple risk/reward ratio calculation, and contrary to popular opinion, quick loan/payday companies are not in the habit of taking undue risk.
We have written extensively about the different types of loans available and you can read about them all here, ‘Our Guide To Understanding How Much You Can Borrow For A Personal Loan‘.
Is the Quick Loan Industry Regulated?
It is fair to say that the payday loan industry did not cover itself in glory prior to the UK regulator, the FCA, introducing an array of new regulations back in 2014.
There was evidence of sky-high interest rates, huge fees, and relatively small loans often morphed into thousands upon thousands of pounds worth of debt.
As a consequence, under the new regulations:-
- Daily interest is capped at 0.8% of the original loan
- Accumulated fees and interest cannot exceed the original loan value
- Fees are capped at £15
While the comment about fees and interest is relatively subtle, it has for many customers been a game-changer. The case is slightly different if loans are rolled over, but in the event, the client has financial difficulties then the accumulated fees/interest cannot exceed the value of the original loan.
What Interest Rate Should I Expect to Pay?
While the daily interest rate has been capped at 0.8%, it is still possible you could encounter quick loan interest rates up to and in excess of 1500% if you have extreme financial difficulties.
In some ways, this figure is a little misleading because the average loan is £100, which is paid back within 30 days.
So, bearing in mind that the quick loan company will need to make a profit what can be a relatively modest interest payment over a short period can look significant when annualised.
What Fees Should I Expect to Pay?
As we touched on above, in years gone by there were serious concerns about the huge level of fees charged against client accounts in the event of missed payments.
As a consequence of the recent FCA regulations, these fees have been capped at £15, which is extremely helpful, especially for those experiencing financial difficulties.
There is no doubt that regulatory changes have prompted a major shakeup of the quick loans/payday loans industry which is now much more transparent than it was in years gone by.
How Do I Find the Best Quick Loan Rates?
While the average quick loan is around £100, as we mentioned above, assuming that there is a regular income, it could be significantly higher.
Where the required loan amount is into the thousands of pounds, then it may be worthwhile working with a credit broker to find the best deal.
With the best will in the world, there are numerous quick loan companies in the UK market today, and even if you have time to research on the Internet, not all competitive rates will be published.
There are two types of credit broker, an independent broker and a tied broker, which should be able to advise you on the best course of action.
What if I Have Difficulties With My Repayments?
Unfortunately, from time to time, we have all probably experienced unexpected expenses, which can sometimes throw our finances off track.
If you foresee problems with your repayments, it is important that you contact your loan provider to make them aware.
From a pure business point of view, they would rather you pay something back than nothing.
As a consequence, they may be a little more accommodating than you might expect if your difficulties are only short-term.
Common Reasons for Quick Loans
As we touched on above, at some point in our life, we will all come across various unexpected expenses which we have not budgeted for.
Those applying for quick loans are often in need of short-term capital to cover:-
- Medical bills
- Repair/maintenance of home appliances
- A Shortfall on rental payments
- Failed MOT/car repairs
- Home repairs such as plumbing, electrical, etc
In reality, as long as you can prove you have an income stream to cover repayments on your loan application, then there is every chance you will be successful.
Even though each quick loan/payday loan company is legally obliged to carry out a credit check on each application, as long as you can prove regular income there is every chance your loan application will be successful.
Even though the regulatory structure is much improved, applicants with a difficult financial history could still attract interest rates up to 1500% and beyond.
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