Compared with just a few years ago, there are a lot more choices for Brits who need a small loan to tide them over. In this article, Loan Broker’s team thought that this might be a good time to share with you the following types of loans so that you can make the right choice for you and your personal circumstances.
We look at:
- guarantor loans,
- logbook loans,
- pawnbroker loans,
- doorstep loans,
- borrowing money from friends and family,
- payday loans, and
- short-term instalment loans.
Bad credit small cash loans
You should only take out a small loan if you really need the money and that you can afford to make the repayments on the loan you’ve taken out. If what you’re considering taking a small loan for is not an emergency and you believe that you could save up the money you need in the next few weeks instead, you should seriously consider doing so.
Do you know someone with a great credit history whose personal financial circumstances are in a good place? If so, you could nominate them for a guarantor loan – what that means is that they’d pay the loan company the money you owe them if you can’t keep up repayments on the loan.
Although there are only a few companies offering guarantor loans at the moment, you should ask yourself the following questions before applying for one and by asking a family member or friend to put themselves at financial risk for you:
- Do I really need the money?
- Could I just ask for the money as a loan from my friend or family member instead?
- Would the relationship I have with my friend or family member suffer really badly if I couldn’t make the repayments? Would it end the relationship for good?
People get very sensitive about money and getting an outside company involved like a guarantor loan company could permanently damage valuable relationships that you have had for years and which mean a lot to you. Please be careful!
When you take out a logbook loan, you surrender the title of your car over to the logbook loan company. As long as you make the monthly repayments back to the loan company, you can continue to use your car for work and for pleasure. However, if you can’t keep up those repayments, your car will be permanently removed. How much do you and your family require your car for everyday life – getting to work, getting to school, dropping the kids off at their friends’? If you make all of the repayments, the title of the car goes back to you.
Logbook loans are quick to organise however, before you take one out, you really have to consider what life for you and your family without a car. Compounding this situation is that, if you did default on the loan, taking out finance to buy a new one might be near impossible because there would be a recent default recorded on your credit report.
Pawnbrokers will lend you money to the value of about 60% of the worth of a valuable object you offer as security – that object could be a piece of jewellery, an expensive TV, or white goods around your home.
Your pawnbroker will hold that object for a number of weeks while you pay them back the money you owe them. The problem is that, if you can’t keep up repayments and then come up with an alternative settlement plan with your pawnbroker, they will then try to sell your valuable item to another customer to get their money back and to make a little bit of profit.
Doorstep loans are often paid in cash to a borrower and then the borrower pays back what they owe together with the interest to a collector who visits them in their home usually once a week.
Borrowing money from your friends and family
You can always ask friends and family members if they can help you out if you find yourself in a difficult temporary financial situation. Try to make sure you only ask friends and family members who would not themselves be put in a difficult financial system if, for whatever reason, you could not keep up with the repayment schedule you’ve agreed with them.
Please be aware that, as with guarantor loans, money has been the reason that many close relationships have broken down and that, if you can’t pay them back, you may be putting the future of those relationships at permanent risk.
Payday loans allow borrowers to benefit from an agreed amount of money to be paid into their bank account which the borrower then repays plus interest all in one go.
Short-term instalment loans
Short-term loans are like payday loans expect that, instead of making one repayment, you can make up to 12 monthly repayments instead. Short-term loan borrowers are generally allowed to borrow more than if they had taken out a payday loan. The amount they repay every month is smaller than what a payday loan borrower would have to pay back however, over the course of a short-term loan, the interest you’ll pay is greater.
Small loans UK – making the right decision for you
Each of the types of small loan we’ve listed above is an option for you if you need a small amount of money to tide you over. It may come as a surprise though that payday loans and short-term loans offer more protection because of special Financial Conduct Authority rules governing how lenders must behave.
The four most important rules imposed on lenders you need to know are that:
- You won’t be charged more than £15 for defaulting on your loan,
- Interest and penalties on the loan cannot be more than the amount you took out,
- The interest rate on your loan cannot be more than 0.8% per day, and
- You must be subject to a comprehensive affordability check before having your loan application accepted.
Small loans without a guarantor through Loan Broker
If you have decided that the best way for you to find the money you need to tide yourself over a tight financial spot is either a payday loan or short term loan, fill in your details at Loan Broker so that we can match you up with the lenders most likely to want to work with you and your family.
Within a minute, we’ll let you know the very best offer we’ve found among our panel of lenders. If you like the offer and you know that you can comfortably make all the repayments, you can take out your loan – a new relationship between you and the lender will be created.
To start your search, please click here.