Yes, you can get an instant cash loan without a perfect credit score. In fact, these loans are aimed at subprime borrowers, but these loans could be expensive. You should try to look for affordable alternatives before jumping into it.
What are instant cash loans?
Instant cash loans are short-term financing options designed to provide quick access to money during emergencies such as medical bills, car repairs and the like. These loans are processed within hours. The reason for quick disbursal is that they offer a paltry sum. You can borrow between £100 and £1,000.
Instant cash loans are not a distinct type of loan. All short-term emergency loans are called instant cash loans as they provide you with funds instantly.
Do you need a perfect credit score to qualify for instant cash loans?
No, you do not need a perfect credit score in order to get instant cash loans on the same day. Most borrowers who apply for these loans are subprime borrowers. They struggle to have a considerable size of safety net to cover unexpected expenses. These loans have been designed to help such borrowers bridge the gap in their savings so as to cushion the blow of financial setbacks.
Just because these loans do not prioritise a stellar credit rating, it does not insinuate that money will be disbursed without credit checks. There are some lenders who do not run credit checks, but they cannot be registered lenders. You should beware of loan sharks. They charge outrageously high interest rates to capitalise on borrowers’ vulnerability.
A registered lender cannot sign off on your loan application without running a credit check. Even if you are borrowing £100, credit checks will be performed. In addition to your credit score, they will check your income sources.
How much do instant cash loans cost?
Undoubtedly, instant cash loans are expensive. Interest rates are capped at 0.8% per day, and late payment fees, in case of a missed payment, are capped at £15. The maximum cost of a loan is 100% of the borrowed sum, which means if you borrow £100, you cannot be charged more than £200.
What are the upsides and downsides of instant loans?
The following table reveals the advantages and disadvantages:
|
Pros |
Cons |
|
The application is approved the same day. |
These loans are expensive. |
|
The money is disbursed within 15 minutes after approval. |
Your credit score will be damaged in case you miss a payment. |
|
You can choose either a weekly or a lump sum repayment plan. |
You will fall into an ongoing cycle of debt if you make a default. |
|
Your poor credit score will not get in your way of getting qualified for these loans. |
There may be hidden fees. You should read the fine print carefully. |
What are the alternatives to instant cash loans?
The following are the alternatives to instant cash loans:
- Credit union loans
You need to be a member of a local credit union in order to borrow money from it. Credit unions accept applications from borrowers with substandard credit reports. They are known to charge competitive interest rates. Credit unions offer flexible terms as compared to their counterparts. You should compare their deals with lenders, so you choose the most affordable loan.
- Borrowing from friends and family
Borrowing from friends and family is the cheapest alternative to loan terms. However, this requires discipline in payments. Make sure you do not delay payments because this will break trust.
- Salary advance
If you need money urgently, you can ask your employer if there is a facility for getting a salary advance. This will help you avoid taking out expensive loans to meet unexpected expenses. However, bear in mind that your employer will deduct the advance from your next month’s salary. Make sure that you do not struggle to cover your essential expenses at that time.
How are instant cash loans paid?
Instant cash loans are small emergency loans. The maximum amount you can borrow is up to £1,000. Since the loan amount is small, you will need to discharge it in one fell swoop. Some lenders may offer you a weekly instalment payment plan, but the repayment length cannot exceed a month.
Are instant loans as expensive as personal loans?
No, instant loans are more expensive than personal loans for bad credit in the UK. Instant loans are short-term, high-cost debts to be paid off at one shot, but bad credit personal loans are large loans. They start from £1,000. They are paid down in fixed instalments over an extended period. The APR for bad credit personal loans is up to 49.9% while the APR for instant cash loans is up to 500%.
What things should you consider before taking out instant cash loans?
There are various factors to consider before taking out instant cash loans:
- First, you should consider that the lender you are borrowing from is registered. If you borrow money from an unauthorized lender, you will not be able to make an affordability complaint. Check the registration of a lender on the FCA Register.
- Before you borrow money, check your affordability. If you borrow more than you can repay, you will most likely make a default. Once you miss a payment, you will end up damaging your credit score. Your financial condition will be ruined too.
In addition, ask yourself the following questions:
- Are there alternatives such as credit cards? Are they cheaper than instant cash loans?
- Is it for essential and unavoidable spending?
Do not borrow money if you are already struggling with debt problems.
To wrap up
Yes, you can get an instant cash loan without a perfect credit score. However, you will need to demonstrate your repayment capacity. Use these loans only when it is urgent, and you know you can afford payments.
Try to borrow money from a registered direct lender as they run an affordability check before approving a loan application. This reduces your chances of falling into debt.
