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Types of Quick Loans Bad Credit
14 Feb 2019

Two Types of Quick Loans Bad Credit to Consider

If you have a poor credit rating but need to get your hands on money fast to meet a financial emergency there are two types of quick loans bad credit you might want to consider. Here we look at the benefits of each of these loans and consider which might be the most suitable for your circumstances.

There are many types of loans out there and anyone with a bad credit rating may be able to apply and get approval for a loan, but some are easier to get approval for and pay out faster than others if approved. The two most popular choices for loans that are quick to apply for and pay out are:

  • Payday loan;
  • Short-term loan.

Loan Applications Have Come a Long Way

Both the payday loan and the short-term loan are quick as the whole loan application process is undertaken online, from start to finish.

In the past, when applying for traditional loans, there was a certain protocol to follow. This was you had to have a good credit rating and something substantial behind you, such as a property. You then made an appointment to meet your local bank manager and asked for a loan. The bank manager would consider your request, ask for lots of information and then you sweat it out as they make up their mind whether to give you the loan or not.

The loan process got a bit faster when people started to own home computers. People found they could apply online for a loan. However, the loans were not the quick loans we know today. While some information could be given online, you then had to wait a few days to see if you were approved, and wait even longer for the paperwork to arrive at your home so you could sign it and send it back. If you wanted money fast for an emergency, this was certainly not the way to go.

Today people can apply for loans online and as the entire loan process is undertaken online, you can get approval within minutes. If you are approved, money could be paid into the bank on the same day or next day. The speed of loans has certainly made great strides.

The Emergence of Payday and Short Term Loans

The entire loan application has become easier for everyone. In the past people were only approved for loans if they had a good credit rating. This was until quick loans, otherwise known as payday loans or short term loans came onto the scene.

Anyone with bad credit struggled to get approval for a personal loan of many thousands of pounds to be repaid back over several years.

However, during the early 1980s a new type of loan began to surface, the payday loan or quick loan as it is sometimes called.  At this time, the loans were not regulated and as such, some unscrupulous lenders were charging huge interest rates and fees for payday loans.

Today, thankfully, times have changed and while payday loans may be one of the most expensive types of loans, they are watched over by the FCA, who capped them from 2015. Providing payday loans are used as they are designed to be utilized, repaid in the short-term, they can work as they are intended.

Quick Loans Bad Credit over the Short Term

Both the payday loan and the short term loan are loans that are quick to apply for and which pay out fast.

However, there is a difference between the two, so here we will look at which of the two might be the most suitable for your circumstances.

Why Might A Payday Loan Be Better?

A payday loan might be the best option if you only want to borrow between £100 and £500 and you know you will be able to repay the amount borrowed plus any interest, back over one to three paydays. This loan is taken out between one to three months in other words.

The repayments of the loan are made on the days that you are paid each month so you do have to work these out before applying for the loan and make sure that you know you will have enough money to live on when you have paid the payday loan repayments.

The payday loan is one of the easiest types of loan to be approved for if you have a bad credit rating, due to the fact that the risk to the lender is small as you are only borrowing a small sum of money and repaying it back within one or two months.

A payday loan is used in any situation where you find yourself short of money but need to make a pay out. For instance:

  • Your car breaks down and needs towing to a garage to be fixed;
  • An unexpected remainder for a utility bill comes through the door and needs paying before pay day;
  • Your cooker needs a spare part and it cannot wait until you get paid;
  • Your child is going on a school holiday and you forgot the deposit needs to be paid and payday is still some time off.

In any of the above circumstances, a payday loan might be suitable. Borrow the money fast and pay it back quickly so you don’t have debt hanging around your neck.

Why Might A Short Term Loan Be More Suitable?

You might want to borrow a small sum of money but needs a bit more than what is offered with a payday loan and repay the loan back over a slightly longer term. In this case, the short term loan may be more suitable.

The short-term loan may allow you to borrow up to £1,000 or more. This is going to depend on the lender and your credit rating. Again, the loan application can be undertaken online and you should know within minutes if you have been accepted. If you are accepted, the money may be deposited in the bank on the same day or next day.

The short term loan is typically repaid back between three and twelve months but again this would depend on the amount you borrow, the lender and your credit rating.

Neither the short-term loan nor the payday loans are loans suitable for long-term borrowing and they should not be relied upon month to month.

Applying For a Payday Loan or Short Term Loan

You can apply online for a payday loan or short term loan. Here at Bonsai Finance we can match you up with one of our panel of lenders. We work alongside numerous lenders are offering a wide range of loan options with competitive rates, even for people who have less than a perfect credit score.

To be eligible to apply for a loan with the lenders we work with you need be 18 or older, have a bank account with a debit card attached to it, be able to set up a direct debit and have a regular income coming into the house.

The lender will make a check of your credit file as they have to by law in the UK, but they will also consider your ability to be in a position to repay the loan. The lender will work out what you have coming into the home and what you pay out. This will include your rent or mortgage repayment, food bills, any other bills or direct debits. If the lender thinks you can afford the loan and you are in a position to repay it, they will offer you the loan and money may be paid into your bank on the same or next day.

One of the biggest benefits of allowing us to match you up with a lender is that if one lender says no we move onto the next and continue doing so. However, you only have to make one initial loan application to be able to search with numerous lenders.

In Conclusion

Finding a loan if you have a bad credit rating is not always easy. However, with payday and short term loans being available borrowing is becoming possible for people with poor credit ratings. Both loans offer cash that may be paid into the bank on the same day and you will know within minutes if you are approved. By enabling us to search for your loan, you have access to a wide range of lenders.

Quick loans bad credit can work in the way they are designed to work providing you ensure you can repay the loan on the date or dates agreed. These two loan options are among the quickest to apply for and pay out, but if you need to borrow a larger sum of money than what they offer you might also want to consider a guarantor loan or personal loan.