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Understanding small loan products What are small loans?
Small loans are a form of personal short-term loan available to applicants who need to borrow small amounts of money to stretch their budget until payday. Small loans are usually unsecured, meaning that borrowers have no need to offer their home or vehicle as collateral to secure the loan against.
At Flexy Finance, we help applicants find cash loans from £100 to £5,000 to cover the costs of those unforeseen expenses, such as home repairs and emergency medical bills.
What different types of small loans are there?
If you are looking to borrow a small loan in an emergency, then it may be useful to know the different types of loan that fall under the same categories. The following loan types fall under the small loan short term category:
- Payday loans: These loans are perfect for borrowing small sums of money and repaying on your next payday. While payday loans are prevalent in the UK among many short-term loan applicants, they aren't suitable for long term use, and representative APR and interest rates reflect that.
- Personal loans: These loans are generally unsecured and can be taken out for periods of anything from two months to two years. Personal loans are generally more convenient than payday loans if you wish to spread out the costs of your repayments over months, making the payments more manageable.
- Guarantor loans: These require the applicant to provide a co-signory with their application. Guarantor loans are ideal for those who may not be in full-time employment, receive state benefits or have struggled financially in the past. If the applicant is unable to make repayments then this duty falls on the guarantor. However, this can cause conflicts, can affect both guarantor and borrower’s credit rating, with applicants may struggle to find someone willing to act as guarantor.
- Bank and high-street loans: Banks and high-street lenders can sometimes provide small, short term loans to their account holders. However, their eligibility criteria may be stricter than other lines of credit. Making them a tougher approval option for those who have had financial difficulties.
- Credit Cards: For unexpectedly large utility or maintenance bills which have affected your ability to pay for your monthly expenses, such as commuting, food or living costs. You could potentially use a loan in the form of a credit card. However, be aware of interest rates.
What should I use a small loan for?
There are a number of different uses for a small loan, such as maintenance, repairs and home improvement costs. Other uses of a include:
- Appliance and home repairs
- Vehicle repairs
- Emergency medical bills
- Unexpected utility bills
- Rent or mortgage payments
- Commuting or groceries
How much can I borrow with a small loan?
We work with lenders that will allow you to borrow up to £5000, with the total amount made repayable over periods of 1 month to 2 years (24 months). Typically small loans are borrowed in small amounts, to help cover the cost of small costs.
What is the APR on a small loan?
The current representative APR on the loans that we broker is 1013.30%.
How does the representative APR work on a loan?
APR stands for ‘annual percentage rate’. It refers to the total cost of borrowing money over a year, including the interest and standard fees you have to pay. ‘Representative’ means that 51% of applicants will receive the same interest rate advertised or a lower amount.
For example, the representative rate Flexy Finance offers is 1013.30%. Therefore 51% of customers will receive that rate of interest or lower. It is not a guarantee that customers will receive the same representative APR in their loan agreement.
Not everyone within the 51% will receive the same rate as the APR that is advertised. You will likely receive a personal rate which may be different from other applicants.
A personal rate may be higher, lower, or the same as the representative APR. It is usually determined by your credit score, how much you want to borrow, and your finances. APR is often used as a comparison tool to help people compare different loan providers.
Do you qualify for a small loan Am I eligible for a small loan?
We work with a panel of UK lenders, each of who will have their own list of eligibility criteria that you will have to meet. However, generally, most of the lenders will expect you to be able to meet the following requirements as a minimum.
- 18-years of age
- UK resident
- Valid UK bank account
What is the eligibility criteria for small loans?
In order to have access to a small loan, you will need to meet lenders eligibility criteria. Generally, this will include, but is not limited to the following:
- 18 years of age
- UK resident
- Valid UK bank account
- Have a regular income of over £700
- Afford the repayments
Can I get a small loan if I have bad credit?
Yes, you can get a small loan if you have bad credit. The lenders we work with will still lend to people with a poor credit score or no credit history. Lenders will perform affordability checks to determine the likeliness of you repaying your loan, in addition to checking your credit rating.
It essentially means that your credit score isn’t the only factor taken into account when your application is being assessed. Meaning that lenders may still offer loans to people with bad credit. However, credit rating is still an important factor and applicants can’t be guaranteed to receive a loan if they have bad credit.
For more information about bad credit loans, make sure to check out our bad credit loans page.
What should I do if I'm struggling with debt?
It is important to remember to not to borrow more than you can afford, so always borrow responsibly. These loans should not be used for long-standing financial debt or other issues. Remember, if you are struggling with debt please click on the links below:
How do I apply for a small loan? Where is the best place to get a small loan?
If you're looking to borrow a small loan, you may be wondering how to apply. Like most payday loans, there are two ways you can apply, either in person or via an online application. Here's how the application process works.
- Applying in person: You can apply for your loan in person by visiting your local high street lender. You'll need to supply evidence of your affordability by providing bank statements and payslips, as well as valid ID and proof of home address.
- Applying online: You can apply for a loan by applying directly with a lender using their website. Or by going through a credit broker, allowing you to compare the many options available to you.
How can I apply for a small loan?
If you’re looking to apply for a small loan with Flexy Finance, the process is simple. The application process is entirely online meaning that you can apply from the comfort of your own home using either your phone or your computer.
Step One - Completing the online application
First thing that needs to be completed is the online application form. This form is easy to complete. It will require you to disclose some personal details which are needed so that we can assess and process your application, and hopefully offer you a loan.
Key details we need, include:
- Loan amount and repayment: This is where you decide how much money you want to borrow and for how long you will need to repay the loan. The lenders we work with can provide financing from £100 - £5000 with a tailored repayment plan of 1 - 24 months
- Personal information and contact details: We require some personal details as well as your contact number and email address.
- Living arrangements: Including where you currently live and for how long you have lived in said residence.
- Employment information: Information on your current employment, such as your role and for how long you have been employed for.
- Income details: Your monthly take home pay is used to help us determine whether you can make regular monthly repayments.
- Outgoings: Your monthly expenses are also taken into account when assessing the affordability of your loan.
- UK bank details: Your bank details are needed so that money can be transferred into your account after you have agreed to the loan.
Always remember that when borrowing money, never borrow more than you can afford. Even with a small loan, make sure to carefully consider that you will be able to make the monthly repayments.
Step 2 - Having your loan accepted.
When your application is accepted, our job as a credit broker is to match your application with a lender that can provide you with the loan you have applied for. The lender will review your application and offer you a loan.
It’s very important to thoroughly check the terms and conditions of the loan before you choose to accept it. If you are unsure or uncertain about the loan always ask the lender for more information. Key details to lookout for in the terms and conditions include:
- Loan amounts
- Repayment terms
- Interest and APR
- Additional fees and charges
If you are unsure about any of the conditions, always ask the lender for more information.
If you decide to accept the loan, you are obligated to uphold the terms and conditions of the contract. The money will then be transferred directly into your bank account.
Some lenders may require you to provide additional documentation when offering you a loan.
*Some lenders may require you to provide additional documentation when offering you a loan.
Reminder: You can opt out of a loan application at any point before accepting the loan offer provided by the lender. You cannot opt out of the loan after accepting the terms of the loan offer and signing the contract.
Step 3 - Making repayments
Once the money has been transferred into your bank account, it is then your responsibility to pay the amount borrowed and interest each month. This will have been pre-agreed with the lender, so make sure that you understand how the repayment process is handled.
Is Flexy Finance safe?
Yes, Flexy Finance is safe. We are an FCA regulated and authorised credit broker and are authorised on the Financial Services register under the reference number: 740571.
As a credit broker we only work with direct lenders that are authorised.
Will I be approved for a small loan? What happens if my small loans application is rejected?
We help a range of different applicants to find short term loan products regardless of whether they've been turned down for credit in the past. Nevertheless, if you're concerned you may have your application rejected due to financial difficulties in the past and your application is rejected, here's what you can do.
What to do If the application is rejected
Double-check the information on your application: Check for errors and typos on your form which could potentially affect your application. Mistakes on applications are a common reason for applications being rejected due to problems confirming identity or income.
What if there were no mistakes on my application? Contact the lender directly to ask for more information on why you were rejected for credit. This can be due to factors such as your creditworthiness and/or affordability. If you have issues with your credit, then you may want to take action to improve this.
If poor credit was a contributing factor, lenders may be worried about your ability to repay your loan. Lenders assess your creditworthiness based on how you've used credit in the past. If you've missed payments, then this could affect your likeliness of being approved. Check your credit report before you apply with Equifax.
If lenders are concerned with your affordability, then may reject your application. All lenders have a duty to carry out responsible lending practices, to safeguard you against affordability issues and future debt. Check your affordability before you apply by using a loan calculator.
Frequently Asked Questions FAQs
What are small loans?
Small loans are personal loans used in a short term financial emergency where applicants are struggling to make ends meet until payday. As these loans are for little amounts, no collateral is required to secure the loan against.
What is the interest like on small loans?
Small loans are regulated by the Financial Conduct Authority (FCA), meaning that all charges and interest rates are capped. Total fees are capped at 100%, meaning that applicants will not be able to accrue charges or interest more than the total amount of the loan itself. These loans are not suitable for long-term use, representative APRs reflect this.
Will a small loan affect my credit score?
By ensuring that you make your repayments in full and on time, a small loan could positively impact your credit score. However, failure to make loan repayments could end up in charges and fees, which will negatively impact your credit.
How do the repayments work on a small loan?
Most of the lenders that we work with will collect payments using a Continuous Payment Authority (CPA), which you have the right to cancel at any time. If you miss a repayment or cancel your CPA, you will be able to make repayments by getting in contact with your lender directly.
Are there any additional fees or charges?
At Flexy Finance we charge no fees for the service that we provide. However, the lender that you receive your loan with may have their own fees and charges. These will be stated in the terms and conditions of the loan when you receive your loan offer.
Why choose Flexy Finance?
At Flexy Finance we help find financial products to customers with an application process designed to make their lives easier. Whether you need help covering an unexpected bill or making ends meet, we can help. We assist in finding fast and flexible finance from £100 to £5,000.
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