There are many different kinds of loans. Large loans – mortgage loans and car loans – are a big undertaking that requires a lot of thought, a fairly long application process in many cases and a good credit history.
There are plenty of times though in life when a small cash loan can be just what someone needs to help pull them through a tough time financially.
Small Cash Loans from High Street Banks
There are very few banks left who offer small cash loans. Often the minimum loan amount is £3,000 or more and in order to qualify for such a loan, you have to have a good credit record and a fairly solid work and residential history.
One thing that people do tend to forget about getting a loan is that although your credit rating is a very important part of any lenders decision whether or not to offer you a loan it is not the only criteria.
How long you have been at your job or lived in your home are taken into consideration as well. That means that if you are new in your job, or are a tenant rather than a homeowner even if you have a decent credit history a bank may turn you down for a personal loan.
In addition, many people are not looking for a loan for thousands of pounds that will come with all kinds of long-term fees and interest attached. Instead, they are looking for small cash loans – a few hundred pounds perhaps – to meet a pressing financial need. A car repair or an overdue bill perhaps. That is where a growing number of online lenders are coming in to fill that gap in the financial market.
Types of Online Small Cash Loans
These days there are a number of different kinds of small cash loans available to consumers, some of them even to consumers with poor credit. here is a little information about the more commonly utilized loan types:
Payday Loans – Payday loans are small cash loans that are designed to be taken out only for a very short time – usually 30-50 days at most. Most payday loan lenders do not necessarily hold bad credit against an applicant, so a small cash loan may be available to people with poor credit as long as they can prove they have a steady source of income.
The idea behind a payday loan is that it provides consumers with cash very quickly to meet a pressing need and then they then pay that loan – together with fees and interest – back the next time they get paid.
The interest rates attached to payday loans are quite high, which is why many people are very critical of them. Things have changed in the UK recently though and the interest rates are legally capped now, something that can make a real difference.
In order to avoid paying too much for a loan like this, it should be paid off as soon as possible, even if you are offered the chance to extend the loan for another few weeks as that convenience will come with even more fees attached to it.
Longer Term Small Cash Loans – There are some online lenders who offer small cash loans – even to people with poor credit – that can be paid off over a longer period of time than a standard payday loan can.
This will, of course, mean that weekly or monthly repayments may be lower but these loans can be more expensive than a payday loan as they too have fairly high-interest rates, the interest that will accrue for a longer period of time.
What Kind of Small Cash Loan is Right for You?
If you are considering taking out a small cash loan you really do need to be willing to do some research before you do so. You also need to be honest – with yourself and your lender – about what you can afford to pay back and when you can afford to do so.
In order for it not to become far too expensive a payday loan should only be taken out if you are sure that when those next few paydays come around (most payday lenders will let you split your repayments over several pay dates) you really will be able to afford to “lose’ the money from those cheques to satisfy your debt.
Some people find that the longer repayment plans work out better for them because they take less of a bite out of each pay cheque if the repayments are spread out over a longer period of time and are therefore smaller. On the downside of that though is the fact that the loan will probably cost you more in the end, even if you do not necessarily notice it at the time.
If you do decide that you still want to take out a small cash loan shop around lenders as well. And most importantly of all make sure you read the terms and conditions attached to any loan you take out very carefully and not just tick the box saying you did when you really just glanced through them in your haste to get the loan application completed!
Need a small short-term loan? Loan Pig are not only direct lenders but we also work with a network of other, respected lenders to find the loan that’s best for you.