1. Could offer a quick solution to a financial emergency
Whether it’s an unplanned bill or urgent veterinary treatment for your pet, a financial emergency can play havoc with our budget and threaten to leave us out of pocket. A payday loan could provide a quick resolution to this if you don’t have savings to fall back on.
It’s worth noting that a payday loan is not the only option to consider when seeking a swift solution for an unexpected expense.
If you’re hoping to spread the cost of borrowing money over a longer period than a month, you might be interested in a short-term loan instead.
CashLady is a credit broker, and we work with over 30 direct lenders of short-term loans with repayment terms between 3 and 60 months, depending on the amount of money you apply to borrow.
2. Could be accessible for people with bad credit
‘Can I apply for a payday loan with bad credit?’ is a commonly asked question.
If you have bad credit, you might find that your borrowing options are restricted.
However, there are a number of lenders who specialise in payday loans for bad credit.
What about short-term loans for bad credit? Yes – they exist too. In fact, several of the lenders on the CashLady panel are willing to consider applications from people with bad credit history.
Please be aware that a bad credit loan, whether payday or short-term, could come with a higher rate of interest.
3. Availability
Many payday loans can be applied for online, and you can typically make an application at any time of day or night. Having the flexibility to search and apply for a loan outside of traditional working hours could be helpful if your boiler decides to pack up during the early hours of a winter morning or your car breaks down on the way to your night shift.
Please be aware that if you apply outside of office hours (usually 9am – 5pm), your application may not be processed until the next working day.
Looking for a short-term loan?
If you need money in a hurry, don’t waste time trawling between lenders trying to find the right fit for you – leave the hard work to CashLady.
As a credit broker, we can scan our large panel of direct lenders to search for a suitable loan, 24 hours a day, 7 days a week.
CashLady Representative 79.5% APR
4. Straightforward application
If you’d like to search for a short-term loan with CashLady, our online form should take no longer than five minutes to complete, and in just 60 seconds, we can let you know whether we’ve found you a loan to suit your personal circumstances.
Most of the short-term loan lenders on the CashLady panel offer an online-only application process, but it’s worth bearing in mind that some may ask you to visit your local branch to complete your application.
5. Quick access to funds
It’s vital to understand that no loan, payday or otherwise, can be guaranteed to be ‘quick’, and you should never rush your research or application stage.
If you’re approved for a payday loan, your money could be sent the same day.
Payout timescales vary between lenders, and the time it takes for the money to appear in your bank account will depend on your bank’s policies and procedures.
Some of the lenders on the CashLady panel could also transfer your funds on the same day as your application is accepted.
6. Easy management
In many cases, you’ll be able to manage your payday or short-term loan online, either through a personalised customer account or via a downloadable app.
Once logged in to your account, you’ll usually be able to view your balance and repayment date, as well as have the option to make a payment online.
Some lenders may also send you texts or notifications to remind you of an upcoming payment.
This could make it more convenient for you to manage your loan and keep on top of repayments.
7. If you repay your payday loan early, you could reduce the overall cost
Depending on your lender, you might be able to repay your loan early. This could reduce the amount of interest you’re charged, which will, in turn, reduce the overall cost of the loan.
Again, it’s important to point out that this could also be the case for a short-term loan.
Please note that some lenders could charge a fee for early repayment.
8. Short-term impact
A payday loan is generally repaid in full, plus interest, within a month.
With longer-term loans, you’re going to be repaying the money you owe for a prolonged period of time.
A payday loan might not suit everyone’s circumstances. For some borrowers, a longer repayment term could make the loan more manageable. Depending on how much money you’re approved to borrow, CashLady could help you search for a loan with a repayment term of up to 60 months.
Before you apply for a loan, you should take some time to think about what sort of repayment term will best suit your personal circumstances.
9. A closely monitored industry
In 2014, the Financial Conduct Authority (FCA) introduced stricter restrictions for the payday loan industry.
These rules were brought in to promote safer, more affordable borrowing, and state that:
- Daily interest must not exceed 0.8% per day.
- The total fees and interest must never cost more than the amount of money borrowed.
- If a borrower defaults on a repayment, they cannot be charged a fee of more than £15.
When searching for a loan, you should always make sure that the lender you apply with appears on the FCA register. You can check to see whether a company is authorised and regulated via the FCA Firm Checker tool.
CashLady only works with lenders who are authorised and regulated by the FCA. While they don’t offer payday loans, the lenders on our panel could provide a financial float in the form of a short-term loan instead.
Payday loan v short-term loan
There is no right or wrong answer to the question, ‘which is better, a payday loan or a short-term loan?’ as preferences will vary between borrowers. The type of loan that works best for you will be the one that suits your own personal circumstances.
The key difference between a payday and a short-term loan is the repayment term(s) available. While a payday loan is designed to tide you over between one payday and the next, a short-term loan offers a range of repayment terms to suit various borrowing needs and financial situations.
Due to the increased restrictions on the industry, you might not find too many payday loan lenders nowadays, and short-term loans are more commonly available.
Things to think about before applying for a payday loan
There are several things that you should think about before you apply for any type of loan.
Crucially, you need to make sure that you can afford to repay the money you apply to borrow, and bear in mind that you’ll also be charged interest.
You should never borrow more money than you need or can afford to repay.
A payday or short-term loan could be ideal if you need money quickly to pay for a financial emergency, although you should take the time to consider other options before you decide. Could a loved one lend you the money? Is there any possibility that you could take a step back and save the money instead?
If you’ve decided that a loan could be suitable for you and your application is accepted by a lender, you should read the terms and conditions carefully before signing the credit agreement. It’s a good idea to familiarise yourself with any associated fees, such as late or early repayment charges.
Will a payday loan affect my credit score?
Yes. Any type of loan will affect your credit score. Here’s how:
1. Credit check
When you apply for a payday loan – or any other type of loan – the lender will complete a full credit check, known as a creditworthiness assessment. This could include a hard search, which will remain on your credit file for up to 12 months. If you make multiple credit applications in a short period of time, multiple hard searches could be carried out, and this will damage your credit score.
Using a credit broker, like CashLady, could help to reduce this risk. We search our large panel of lenders using only a soft search.*
2. A late or missed repayment
A late or missed repayment will cause your credit score to decline and could make it a challenge to be considered for credit in the future.
Your lender could also charge additional fees for a late or missed repayment.
3. Repayments made on time
On the other hand, if your repayments are made on time each month, you could notice an improvement in your credit score. This will be subject to how you’ve managed any other credit commitments during your loan term.
In summary: payday and short-term loans
- A payday loan is a type of borrowing where customers repay the full amount of money borrowed, plus interest, within a month.
- This type of borrowing could be suitable if you find yourself faced with a financial crisis, don’t have the funds immediately to hand, and are confident that you can afford to pay back the money borrowed by the following month.
- A payday loan is not the only loan to consider in such situations; a short-term loan could also be a suitable solution. The main difference between payday and short-term loans is that payday loans need to be repaid in a month, while a short-term loan comes with various repayment terms.
- CashLady is a credit broker. None of the lenders on our panel offer payday loans, but they do offer short-term, personal loans between £100 and £10,000. Depending on the amount of money you apply to borrow, you could repay your short-term loan over a term of 3 to 60 months.
- Whether applying for a payday or short-term loan, you should always make sure the lender is authorised and regulated by the FCA. All the lenders on the CashLady panel are authorised and regulated by the FCA.
- The payday loan industry is closely monitored and certain rules are in place to protect borrowers.
- Bad credit? You might still be able to apply for a payday or short-term loan from a specialist lender, although a bad credit loan could come with a higher rate of interest.
- Any type of loan will affect your credit score. How you manage your borrowing will influence whether this is a positive or negative change.
What should I do if I can’t afford to repay my payday loan?
If you’re struggling to pay back your loan, you should contact your lender. Regardless of the type of loan you have in place, your lender will be able to talk to you about any suitable solutions that could help you through this difficult time.
If you’re worried about money and don’t know who to turn to, please know that you can reach out to any of the following organisations for free advice and support: StepChange, MoneyHelper, Citizens Advice, and National Debtline.
*If our soft search reveals that you’ve been matched with a short-term loan and you choose to make a full application with the lender, a creditworthiness assessment will be completed. This will involve a hard search or Open Banking. A hard search will remain on your credit file for up to 12 months. Multiple hard searches in a short space of time will harm your credit score.
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