If you suffer from a poor credit history and need a small, short term loan, your options may be limited.
Every day, thousands of people search the internet for short term credit solutions designed for people with an adverse credit history.
Representative Example: Amount borrowed: £250 for 3 months. Number of repayments: 3. Interest rate p/a: 292% (fixed). Each repayment amount: £137.21. Total repayable: £411.63. APR 1272% Representative
The first question you should ask when considering any form of credit is: «Can I afford to repay my borrowing in full and on time?»
Loans designed for people with less than perfect credit scores often have high interest rates, which need to be carefully considered.
If you need a bad credit payday loan today, you can apply with CashLady, using our secure online application form.
What is a bad credit payday loan?
A bad credit payday loan is a small, short term loan designed to help customers overcome unexpected financial emergencies.
The interest charged and APR on a bad credit payday loan can differ from lender to lender but the FCA caps on fees and charges always apply. This means that you should never pay more than £24 per month for every £100 borrowed and never more than double to original amount borrowed.
Bad Credit Payday loans are designed to meet urgent cash needs. They are one of the few short-term loan products available to people with an adverse credit history.
If you take out any form of short term credit, It is critical that you always borrow within your means and repay your loan commitments on time.
Bad credit loans — direct lender?
Bad credit loans should always be approved and issued from an FCA authorised direct lender. As a customer you have the option of making a loan application direct or through a credit broker like CashLady.
If you feel confident in your credit profile and believe you should be approved by most bad credit lending specialists, you may find it useful to compare the various options available. It is important to look beyond the money and take things like customer service into account.
Fortunately, most direct lenders provide 3rd party customer reviews to help you make the right decision
Be aware that if your loan application is unsuccessful, you will need to start the process from the beginning.
Using a regulated credit broker can help with the challenges of finding a suitable loan provider quickly and efficiently.
Below is a list of the bad credit loan partners we actively work with. All are established FCA regulated lenders for your peace of mind
Why consider CashLady for my bad credit loan?
At CashLady we have a dedicated panel of FCA approved short-term credit providers. Many of our lenders may be able to lend you funds in an emergency, even if you have a poor credit history.
Applying for a payday loan with CashLady.com is completely free of charge. We will never charge you a fee for using our service.
When you apply for a loan with CashLady.com it means your application will be instantly seen by our panel of trusted lenders. As a borrower, this can mean more credit options and importantly, a higher chance of your bad credit loan application being approved.
Since 2007, We have helped more than 3 million people apply for short term loans. Today we are proud to serve many thousands of customers applying for short term credit.
It is important to remember that not everybody who applies for a bad credit loan will be accepted.
As with any type of personal loan, responsible borrowing is important. You must be able to repay your loan commitments in full and on time. Doing so will help you avoid building up a cycle of debt, sometimes referred to as a spiral of debt or a debt trap.
What is bad credit?
Bad Credit is a term often used to describe the financial situation of somebody with a history of poor financial management or circumstances. People who have an adverse credit score are likely to have missed credit obligations (such as a loan, utility bill, or credit card)
Essentially bad or ‘adverse’ credit is the main reason why some borrowers find it difficult to obtain finance.
By definition, bad credit is an indication that suggests one borrower is riskier than another.
Although a poor credit score could be the result of financial mistakes made in the past, it can also be the result of not having any borrowing history. Either way, a history of bad credit can often be an obstacle to obtaining a personal loan.
What are the advantages of bad credit payday loans?
- Payday loans for bad credit are often available when you cannot get help elsewhere. They could be the difference between losing use of your car and being able pay for those emergency repairs.
- The application process is relatively non-intrusive
- Payday loans are unsecured loans. This means if you miss a payment you won’t risk losing a valuable possession, although there could be other financial consequences.
- Applications can be completed online for speed and efficiency.
- With some personal loans, you are tied into repayments for months (and even years). With a payday loan, your commitment will be over as soon as your short-term loan is repaid. You won’t have an ongoing commitment to pay back what you owe over many months.
- Payday loans are for relatively small amounts of money. This keeps the cost of borrowing to a minimum.
What are the disadvantages of a payday loan for bad credit?
- Our top ‘advantage’ also features here. Payday loan are often available to consumers that might have applications rejected elsewhere. This can make a loan tempting in non-emergency situations. It would be wrong to treat them as a handy alternative to a traditional long-term loan.
- Payday loans usually come with a higher APR than other types of personal finance. There are now restrictions and price caps in place to protect consumers, but it is always wise to be aware of exactly how much you’ll be paying in total.
- The definition of a ‘payday loan’ states that it should be there to bridge the gap between your next pay cheque. As a result, you won’t have long to pay back what you owe which can sometimes create a problem.
Frequently asked questions
- Will a poor credit history affect my chances of obtaining a payday loan?
The answer in most cases is ‘yes’. But it does not mean your loan application will fail. This is where we can help because we submit your application to many lenders. Affordability will be based on your current financial circumstances and behaviour. It is also one of the best reasons to use a licenced credit broker. An FCA authorised short term credit broker (like us) could give you with a better chance of obtaining the finance you need. Especially if your credit rating is a concern.
- Does it matter how bad my credit is?
Your unique credit score will be an important factor in lending decisions. If your credit score is particularly low, it may prevent you from obtaining any kind of finance. This is because lenders assess the risks associated with providing money. If you have a long history of missed payments, it could be a preventative indicator. To get a better understanding of your credit report why not try a free credit reporting website such as noddle. The better your credit score, the better your chances are.
- Does taking out a payday loan imply bad credit?
Not necessarily, although we do find they are often applied for by to those with lower credit ratings. Most lenders will take this into consideration.
You can read more on how to avoid bad credit in the UK and our special guide about what is your credit score.
If you want more information about how to rebuild your credit rating, we created a series which should give you plenty of useful information.
Affordability is key to obtaining a bad credit loan
As of 2016, loan affordability is of huge importance. This is because of new rulings and stricter regulation from the Financial Conduct Authority. A short term loan provider must lend responsibly and only to those who can comfortably afford to repay the loan.
In the past, some payday loan companies have had a reputation for lending to people with poor credit. The determining factor for approving loan applications today is affordability. The key thing to remember is that you must always borrow within your means.
These legislative changes have meant a more ethical approach to funding bad credit loan applications. Regulated lenders must take a more responsible approach when assessing an individual’s financial circumstances. In doing so, consumers are less likely to take out loans they cannot afford and lenders can reduce the level of bad debt they are exposed to.
What are the differences with payday loans for bad credit?
Bad credit payday loans are usually designed for people who have had a repayment issue in the past. Often they are available from specialist lenders who look at more than just credit history.
When you apply for a loan with CashLady, our lenders will use the information disclosed on your application form to form a decision.
The good news is that many lenders are able to offer loans to adverse credit applicants. This is due to their unique customer assessments, data modelling and lending criteria.
You may find that the APR on your loan differs from the representative APR you see on their website. If in doubt, ask questions of the lender to understand your loan offer thoroughly, before you sign any commitments.
If I apply for a bad credit loan, will it affect my credit rating?
Applications for loans, whether they are accepted or rejected, will usually leave a footprint on your credit file. If you already have a bad history with credit, further credit searches could make your situation even worse. Multiple footprints on a credit file can indicate to lenders that you are unable to manage your finances effectively.
Making multiple loan applications in quick succession can damage your credit file. It is recommended that you don’t move on from one lender to another.
If you are declined by one lender, you will need to repeat the process with another lender. This could lead to never ending cycle of loan applications until you find a lender that is happy to lend you the money you need.
Should I use a credit broker?
This is where a licenced credit broker (such as CashLady) can be an effective solutions. An online loan broker will usually have a panel of lenders to choose from. A single application form is required to submit your details to some, or all of them.
Because brokers filter applications based on criteria, they can show your application to the lenders who are more likely interested in working with you.
Importantly, no credit searches are conducted at this stage, meaning you do not have to worry about multiple credit searches appearing on your credit file and reducing your credit score.
How likely is it that my payday loan application will be approved?
Getting your payday loan application approved depends very much on your specific circumstances
Any provider of bad credit finance has to make sure that the loan is affordable to you. They will look at your earnings and subtracts all your expenses. These include rent/mortgage, utilities, transport, food, credit expenses. Also, any other recurring expense. The amount remaining needs to be enough for you to be able to repay your loan.
There are still many loan companies that mention high acceptance rates in their advertising. They do so to appeal to borrowers with poor credit ratings. Strict regulations from the FCA are in place to protect customers from irresponsible lending.
Alternatives to bad credit payday loans
If you are looking for other options to a payday finance, our suggestions include guarantor loans, peer to peer loans and credit unions. Eligibility depends on your credit score.
To discover more about guarantor loans, read our in depth series for Guarantor Loans.
For a complete list of alternatives – see our guide to Payday Loan Alternatives.
How to find the best bad credit payday loan option for you
If you are currently looking at the options available, you should tread carefully and exercise some restraint.
Make sure you know what you are taking the loan out for and how you are going to pay the money back.
Interest rates for short term loans can be extremely high, so make sure you have a clear plan in place to avoid things getting out of your control.
Inevitably, a payday loan will be more expensive than conventional loan options. But there are benefits to having a short term loan that is easily (and quickly) paid back.
Shop around and look at the various lenders available to ensure you get the best deal.
Alternatively, consider using a non fee charging broker (Like CashLady) to do the work for you and save you time and hassle.
How payday loans for people with adverse credit can help
This is where short term finance solutions for people with less than perfect credit histories could come in useful. Some creditors may be able accept applications depending on many considerations. They key factor is your ability to repay the loan.
Even if you’ve made mistakes with your finances in the past you might still be a good match for payday loan products. We work with lenders that will consider your loan application based on many factors.
It’s important to note that payday loans are designed to be responsibly borrowed and repaid. This is why you must be employed to get one.
Are there any bad credit loans with no credit checks?
Lenders are obliged to check your ability to repay the loan in many forms sufficient to satisfy affordability. This may in involve a credit check so you can’t avoid being credit checked.
For alternatives and to find out more read payday loans no credit checks.
Summary: Payday loans for people with a poor credit rating
If you need to borrow money for any reason, but are unfortunate enough to have an adverse credit history, a bad credit loan can be very beneficial.
If you are able to pay back your loan repayments each month, you may start to see your credit score rise. This can mean better loan offers in the future (with more competitive APR’s) or even access to more mainstream loan products.