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More and more people are finding short term cash loans handy when it comes to emergency financial help. While these unsecured loans are a recently new way to get money at short notice, if you’re in the market for a quick cash loan, it’s important that you look at what’s involved before applying. By understanding exactly how cash loans work, you can find out if a short term cash loan is the right product for you and how to get the most benefit from them.
The first thing to understand is that these quick cash loans are designed for emergencies only, for instance, an urgent repair at home, an unexpected bill or perhaps finding yourself short on cash just before payday. It’s not recommended that you use them for luxury purchases or impulse buys. To better understand the purpose of cash loans, read the article “What are cash loans?”
Benefits of Cash Loans in the UK
That said, these unsecured loans can be incredibly useful when they are needed and reduce the need toborrow from other sources, such as friends and family. And, of course, most banks won’t give you a short term, unsecured loan for a short period (unless, of course, you have an overdraft facility). Even if your credit history isn’t great, then you could be eligible as a cash loan bad credit customer.
The great thing about these short term cash loans is that the companies who offer them make them easy to apply for and quick to get the cash. The procedure usually involves a cash loan online application meaning no supporting documents and you’ll normally get an answer with one business day. In some cases, the money will be in your bank account and ready for withdrawal the same day.
Disadvantage of quick cash loans
Generally, these loans are repayable (with the accrued interest) in just one or two payments. Sounds simple enough, but there are some drawbacks. Because the term of these loans is much shorter than traditional loans, the interest rate tends to be higher than most mainstream finance, meaning your final repayment could be significantly more than the actual loan. For this reason, you should really consider how vital it is to take one of these unsecured loans. If you can wait until payday then it might be a good idea if at all possible, to try to hold on until you have cash in your bank account again.
Another thing to take into consideration when understanding how cash loans work is the actual repayment. Many lenders require that you set up a recurring payment, also known as a Continuous Payment Authority or CPA. This means they can take the payment from your account via your debit card on the day agreed, so you need to make sure you have the money in your account to cover this and any other bills or payments which may be coming out of your account at the same time, especially if that’s your mortgage, rent or other important bills that may not get paid. Otherwise, the CPA could leave you overdrawn and subject to bank charges. Of course, you can cancel a CPA at any time, but the debt still has to be repaid on the date agreed or you could be hit with non-payment penalties.
If this is the case, you should get in touch with the cash loans lender straight away as you may be able to make an alternative arrangement such as an extension to the existing loan, or even an increase on the existing loan.
In this article, we explain why benefits of cash loans overweight their disadvantages.
How cash loans work. Ready to apply for cash loans online?
Weigh up all the pros and cons before you make the decision and always make sure you’ll be able to afford the payments. Fortunately, should you change your mind, cash loans UK lenders are required by law to offer a 14 day cooling off period, if, for any reason, you decide not to go ahead. However, you will have to pay any interest for the loan over the period of the loan up to that date.
Still, want to go ahead? Then you’ll have to fulfil a number of criteria before being approved for your cash loan.
You’ll need to be:
- Over 18
- Resident in the UK
- In employment (or receiving benefits)
- Have a UK currency bank account and associated debit card
- Meet an affordability assessment
Even if you meet all of these criteria, that’s still no guarantee you will be approved for a fast cash loan. However, applicants who have applied for and been approved for quick cash loans in the past and shown that they were able to meet the terms and conditions of the loan generally will have a better chance of being approved for subsequent loans.
In order to increase your chances to be approved, apply through an FCA autorised credit broker such as Cashlady. We will show you application to a panel of FCA regulated credit providers, which makes your chances of getting credit higher compared to a single lender.