Small Loans

In everyday life, it is impossible to avoid unexpected emergencies and there are many situations that can leave us short of just a small amount of cash. We understand that at some point most of us will need a small loan, so we are committed to helping people find competitive financing options as easily as possible. As a leading credit broker, we help people every day find the small loan they need from our extensive panel of lenders. If you are looking to borrow a small amount, this useful guide will provide the information you need to find the best loan for your situation.

What Are Small Loans?

The definition of a small loan varies, however in general the term ‘small loan’ is used to describe borrowings of less than £1000 which are repaid in less than 12 months. There are many reasons why small sums of money are needed, although unexpected expenses which don’t fit within a person’s normal monthly budget tend to be the main reason. For example, unexpected car repair bills, an urgent utility bill, a broken boiler or urgent home improvements can cause a lot of stress if the funds are not readily available, however, a small loan could be taken out to cover the cost. 

Although you may manage your finances effectively to ensure your bills are paid and you have enough cash to cover day-to-day spending, there are times when unexpected bills arise. In an ideal situation, your income would cover living costs with a surplus to save as a financial cushion each month. However, despite your best efforts, these emergencies can leave you short of cash and small amounts of money are available to fill these gaps in your finances.

Are there different types of small loans?

If you are looking for a small loan, the first thing you need to understand are the options available to you. There are many factors that will determine the type of loan you should be looking for, including your credit history, the amount you are looking to borrow and the ideal terms. 

Little loans are typically borrowed for a few hundred pounds and repaid over the course of weeks and months rather than years, so they can be ideal for cash emergencies. A short-term loan for a small amount can provide the funds you need to resolve a financial emergency, although you should always stick to the repayment plan agreed with the lender. In many situations, it is impossible to avoid these unexpected events, but if you are struggling financially it is important to consider the implications of borrowing money and whether you can comfortably afford the repayments.

1) Unsecured loans

Unsecured personal loans are one of the most popular forms of borrowing, as you are not required to provide collateral as a security, which means there is no risk to your assets. In general, the lowest interest rates will be offered to those with a good credit history. However, if you have a poor credit history you may still be eligible. In comparison, secured loans tend to be taken out for larger amounts, where there is an increased risk to the lender.

2) Payday loans

In the past, many people turned to payday loans when they needed a small cash sum to tide them over until the next payday. They are designed to be short-term credit, which are repaid in full on the borrowers next payday. Although payday loans can provide a cash in an emergency situation, they do tend to have higher interest rates than other forms of lending.

3) Guarantor loans

If you need to borrow money but are unlikely to be accepted, you may be able to take out a guarantor loan. For example, if you have a very poor credit rating a close relative or friend could agree to co-sign the finance agreement. They will need to meet the criteria to be accepted which vary between lenders. Although in general they should have a good credit history, be employed and be a UK resident. If you fall behind on repayments the guarantor will become responsible for making the repayments, so it is important that you seriously consider the implications of this. 

4) Credit cards

It may be possible to apply for a credit card which will provide access to funds to cover emergency expenses. If you are able to repay the borrowed amount quickly, they can offer an affordable form of borrowing and they are widely accepted as a form of payment. Although, if you are unable to repay the borrowed amount quickly, the interest charges and fees can build up over time due to the revolving credit card balance. Depending on how quickly you need the cash it can take days or sometimes weeks for the application to be processed and the card to arrive. If you do not have the luxury of waiting for this, a short-term loan may be a quicker option. 

How can I get a small personal loan?

Here at CashFlex we understand that when you are looking for a loan you probably need it quickly, that is why the whole application can be completed online and takes just a few minutes. When you complete the 2-minute form on our website we will send your application to up to 40 lenders, so that you apply to a lender which indicates a strong chance of approving your application.

The innovative application form on our website will ask for a few personal details, such as your name, address and phone number. You will also need to provide details of your employment and earnings, so the lender can assess your ability to repay the agreement. The information you provide is then shared with our direct lender partners so that you receive a quick loan decision. The information you provide is only shared with our trusted panel of lenders and is kept secure using our 256 Bit security. 

We will match you to a lender which closely matches your financial requirements so that you have the best chance of borrowing the exact amount you require. Once you are matched to a lender you will be sent to their website, where you will need to provide a few further details to complete the application.

The whole process is designed to be quick and if your application to the lender is approved, you could be sent the cash to your bank account in just minutes*. However, the exact availability of the funds will vary between banks as each bank will have different processing speeds. 

Can I get a small loan with bad credit?

We know that it can be difficult to find a loan if you have a poor credit history, however, we may still be able to help. We have developed our innovative QuickCheck loan affordability tool, which will give you an instant estimate about whether our lenders are likely to approve your application. There are a few simple questions to answer, which are designed to provide us with an understanding of your financial circumstances and your affordability.

If our QuickCheck tool indicates you are likely to be accepted, the next stage will be to complete our 2-minute application form. This information will then be passed to lenders who will complete a soft check of your credit file, although this will not leave a footprint on your record. When the first lender responds to the application indicating a strong chance of approval you will be redirected to their website to complete a final application.

At this point, you will be matched to the lender who is most likely to approve your application. Each of our lenders we partner with is authorised and regulated by the Financial Conduct Authority, so they will conduct a hard check of your credit file if you decide to proceed with the final application on their website. This will leave a footprint on your credit record and if you do have a poor credit score, our lenders may still be able to approve your application if you pass their affordability checks. As responsible lenders, it is important to them that you only borrow an amount that you can comfortably repay.

If the credit check shows that you have a poor credit history, you may still be approved. Our panel of lenders are chosen because of their progressive approach to lending, so if you can show the loan is affordable and demonstrate a commitment to repaying in full and on time, you may still be approved. Although, you will need to meet the lender's eligibility criteria, which usually requires you to hold a UK bank account and debit card, be aged over 18, in regular employment and be a UK resident.

Where is the best place to get a small loan?

As a loan broker, we believe that the best place will depend on your individual requirements. However, our website is a good place to get a loan as we offer many benefits compared to approaching lenders directly. In fact, the CashFlex team has more than 120 years’ experience in providing financial services and innovative comparison websites. Our service is completely free of charge to you so there are no additional charges to pay.

Our wealth of experience will help you find the right lender without completing multiple time-consuming applications to individual lenders. In addition, when you use our site you will only have one credit check footprint on your record, compared to numerous checks if multiple lenders carried out hard credit checks on your file. It is advisable to avoid multiple footprints on your file as too many in a short space of time could impact your credit score.

We are committed to only connecting our customers to reputable and trustworthy lenders, so each of our partners is authorised and regulated by the FCA. By taking out a loan with one of our FCA approved lenders, you will benefit from clear and transparent terms, including details about the total amount you will be expected to pay and the number of your monthly instalments. The FCA has also implemented price caps on short term loans, so you will never be charged interest of more than 0.8% per day when you borrow through our lenders.

Although you may only be thinking of borrowing a small amount it is still a form of finance, so you should take the time to consider whether it is the right option for your financial circumstances. A loan should only be taken out as a short-term financial bridge, which you can comfortably repay without leading to financial hardship. During the application process, you are under no obligation to continue with the application and free financial advice is available from a variety of impartial organisations, such as The Money Advice Service, Step Change, PayPlan, National Debtline, the Debt Advice Foundation and Citizens Advice.

These organisations will help you review your finances so that you can take an active approach to budgeting and ensure you will be able to afford any loan payments. By tracking your spending and making the most of opportunities to reduce some areas of your usual budget, you may be able to find opportunities to save in the future.