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Representative example: Borrowing: £1,200 Interest: 0.34% per day for up to 75 days (124% per annum, variable) Representative: 49.7% APR (variable)
Short term loans are most simply defined as a form of unsecured loan that offers quick cash, and has a repayment period of 12 months or less. The loan amount can range between £100-£10,000 – more than enough to handle most unexpected expenses. Short-term loans are a boon to those who find themselves with a sudden, urgent need for funds, perhaps to pay for hospital care after an injury, or to cover vehicle repairs after an accident.
Having easy access to emergency funds is not without cost, of course. The Financial Conduct Authority (FCA) classifies short-term loans as “high-cost, short-term credit,” or HCSTC. The high-cost element is the interest rate, which is significantly greater than that of a secured, long-term loan. Why is this?
Lenders undertake a considerable risk by offering credit without security. The higher interest is simply their way of limiting liability. When weighed against the dire need of a true financial emergency, the price is not unfair. Additionally, when determining the interest rates for UK short term loans, lenders must observe certain regulatory limits, which provide a safeguard against exorbitant, unreasonable fees.
Here at Now Loan, we aren’t content to simply meet regulatory requirements, instead, we strive to get you the cash you need as quickly and as cheaply as possible. So, while all of the above defines short-term loans in general, a short term loan with us is best defined as the credit option tailored to your circumstances and financial needs.
When you think of fast credit, short term payday loans are probably the first things that come to mind. The term “payday loan” has come to represent any short-term lending option, though that is inaccurate and can lead to costly confusion. For instance, you may expect certain interest rates, or be convinced you have more or less time to repay your loan than you do. Thoroughly reading the terms of any loan contract you sign should prevent such mix-ups, but it also helps to understand the different types of loans before you apply.
At first glance, payday loans don’t seem much different from other short-term loans. They offer quick, often same-day funds, and they have a small repayment window. Yet, these features are far more limited with a payday loan.
As their name suggests, payday loans are typically meant to be repaid by the borrower’s next pay date. In such cases, payment could be due just a scant few days after the loan is approved. A loan period of 1 month is also common, and, as efforts have been made to ease the borrower’s burden, having 3 months to settle a payday loan is not unheard of.
The brief nature of these loans naturally limits the amount of money that can be borrowed. A lender will only approve an amount that you can reasonably be expected to repay with your next few checks. Don’t expect to get thousands of dollars with a payday loan.
The short-term loan offered by NowLoan is the better alternative. Higher potential loan amounts mean you can tackle a wider variety of monetary emergencies. And, with up to a year to plan your payments, you can shrink them down into manageable instalments that won’t impact your ability to meet other financial responsibilities.
At Now Loan, we know that disaster can strike when you’re least prepared to meet it. You may be a young person who hasn’t had a chance to build a credit history or someone who simply has a less than perfect record with the CRA. Neither situation can prevent a monetary emergency, but they shouldn’t prevent you from getting the help you need either.
Now Loan provides short term loans for people with bad credit. Our panel of lenders know that your credit score is not the whole story. When you file an application with us, we collect all the relevant data necessary for potential creditors to formulate a fair, realistic picture of your creditworthiness.
That doesn’t mean that every lender will make you an offer. However, those that do will already be aware of your circumstances and be prepared to work with you.
Keep in mind that poor credit history will have an impact on any terms you are offered. It is likely that your interest rates will be on the higher end of what is allowed, and the money you can request may be capped at a lower amount. You should review the terms carefully, and be honest with yourself about your ability to adhere to the contract.
The key here is not to let your bad credit deter you from trying. Applying for a short-term loan with NowLoan takes only minutes, and involves no cost or risk to you, regardless of how good or bad your credit may be.
It’s not uncommon to feel anxious or overwhelmed when borrowing money at the best of times. There are bad actors masquerading as reputable brokers and lenders, who are willing to offer you deals that seem too good to be true. When faced with the stress of an unexpected disaster, it can be hard to identify a scam.
When you deal with Now Loan, you can breathe easy. Our short-term loans are completely safe, legitimate, and they function well within the bounds of FCA regulations. As an FCA authorised broker, we are as concerned with the safety of your transaction and data as the regulatory body itself.
For example, to safeguard your financial stability, there are limits placed on how high short-term loan interest can be. The FCA implemented this cap in 2015, setting the maximum possible cost for the daily interest rate and fees at 0.8% per day. Moreover, your repayment amount can’t exceed 100% of your initial loan amount.
Worried about your personal data falling into the wrong hands during the application process? Don’t be. We’ve taken every precaution, implementing cyber security measures such as SSL site encryption so no third party can access your communications with us. Moreover, we don’t sell your contact information or data to anyone.
Now Loan is a trustworthy broker with whom you can feel safe doing business. If our offerings seem too good to be true, that is a testament to our commitment to provide you with the best options available.
For many borrowers, the most troublesome part of a short-term loan is the short repayment period. Not everyone qualifies for the maximum time allowable, and, even for those that do, sometimes it’s simply not possible to pay the money back on time.
When you anticipate having trouble meeting your repayment deadline, you should contact the lender to discuss your options. Don’t wait until the payment has been missed, as that will trigger fees and damage your credit history.
A lender’s options to help you in this situation are to grant you an extension or to roll your loan over into a new loan contract. An extension is just what it sounds like: you negotiate for additional time to pay the loan back. Of course, this also means the interest will continue to accrue, increasing the amount you ultimately pay.
The rollover option is accomplished by drafting an entirely new short-term loan agreement for the amount of the current loan. In that way you pay off the original debt, at the cost of incurring new debt. Rolling over should be your last resort, as it resets the amount you owe, and the new loan is likely to have a less favourable interest rate.
To prevent this process from repeating and miring you in an infinite cycle of debt, the FCA has limited the number of rollovers to two. They also require lenders to provide you with an information sheet before you roll over the first time, to ensure you fully understand the process, and that you have access to advise on other ways to manage your debt.
The fast cash granted by a short-term loan is alluring to many, so much so that it can blind them to the dangers of recklessly entering into an HCSTC agreement. The high costs and short repayment period of these loans mean they should not be entered into lightly, nor frequently if you have any other choice.
So, when is it appropriate to take out a short-term loan? At Now Loan, we advise you to only consider this option in emergencies, such as:
• Private Medical Expenses. If you or a loved one requires urgent medical attention, the last thing you should have to worry about is how to pay for it. When weighed against your health, interest rates become trivial.
• Loss of Income. It seems counterintuitive to suggest a loan when you’ve lost your employment. However, a sudden loss of income may leave you incapable of paying for rent, utilities, or even food. A short-term loan can cover the costs until you find a new source of income.
• Car Accident. Losing access to transportation can completely upend your life. You may have no way to work, or be unable to get your children to school, or meet any number of necessary obligations. A short-term loan may be your only way to quickly make repairs and get back on the road.
• Special Event. A once-in-a-lifetime concert. An opportunity to travel abroad with someone you love. These are not emergencies, but moments you are not willing to miss. If repaying the loan won’t place you into financial difficulty, then applying is not irresponsible.
A short-term loan may not be the best choice for you, even if you are in the midst of a situation from the list above. Your need, however great, is not the only important element. Your ability, or inability, to meet the contract requirements deserves serious consideration.
While it is true that the FCA has significantly limited the impact of interest and penalties on short-term loans, those penalties can still be enough to make your bad situation worse. For instance, if you take out a loan while unemployed while knowing it is unlikely you will regain income before the loan is due, you will rack up fees and ruin your credit. This will make it harder for you to meet any of your obligations, leading to more defaults, and punitive action.
If you apply for your loan through Now Loan, you’ll be given the chance to compare short term loans from direct lenders. If no offer seems doable for you, you shouldn’t go through with the loan. Lenders can decide if you are qualified to receive a loan, but only you can decide if you are able to meet the terms.
So, you’ve done your due diligence. You understand the benefits and challenges of a short-term loan, and you’ve decided that it’s the right choice for you. All that’s left is to apply, and with Now Loan, that’s the easiest step.
Our application is entirely online and can be completed in 3 short minutes by simply following the step by step instructions. A “soft” credit check will be performed at this point, but don’t worry. It won’t have any impact on your credit score or history. Afterwards, you will be given a list of loan options for which you have been pre-approved.
Which lender you choose is up to you. Each will offer competitive terms, so you should review them all before making your final decision. Once you do, your chosen creditor will do a final credit check as per FCA regulations. If they require any additional information, this is when they will ask.
If all goes well, you’ll sign the loan contract and receive your money all on the same day. The entire process can take less than an hour — a mercifully short time when you need cash in hand immediately.
There is no cost to apply, and no obligation to accept any offers. All terms will be presented upfront. There are no hidden fees, no tricks, and no games. Get your loan now, with NowLoan.