Sometimes things don’t always go to plan and unexpected costs can pop up. If you need a small amount of cash for a short period then a short-term loan is one way to bridge the gap. There may be other options however, and moneyadviceservice.org.uk is a good place to find alternatives.
If your application for a payday loan is accepted, funds can usually be transferred to you within a day. The amounts on offer are generally smaller, and rates higher, than those provided by banks. The loans also generally come with much shorter repayment periods as they’re designed to be a short-term helping hand, not a long-term solution.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.
Please note: High-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
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Please note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.
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Is high-cost, short-term borrowing a good idea?
Payday/short-term loans are a very expensive method of borrowing and are not a good idea for borrowing over longer periods, or for sustained borrowing. They may not solve your money problems.
Before you apply for a payday or short-term loan, make sure you’ve considered other options. Is the expenditure that you’re planning absolutely essential? If you can defer a purchase then you could save yourself money in the long run. If you’re struggling to pay a bill, then why not talk to your electricity, gas, phone or water provider to see if you can work out a payment plan? Read more about alternatives to payday loans at moneyadviceservice.org.uk.
What you need to know about a £100 short term loan
Short term loans are designed to help you out you when unexpected costs (perhaps a vet bill or car repairs) arise. They should not be used as a solution to long term financial problems and you should look to pay them off as soon as possible.
Some key features of a £100 short term loan
High interest rates. Interest rates on £100 loans are typically very high compared to other forms of borrowing. Rates are legally capped, but at an eye-watering 0.8% a day. On a £100 loan, that’s £5.60 a week.
Short repayment periods. Payday/short-term loans are generally designed to help tide you over for a couple of weeks or months. Some lenders will let you borrow for longer, which will result in lower monthly repayments, but remember that if you borrow for longer you’ll normally pay more in interest overall.
Quick access to funds £100 loans can often be approved and sent to you within a few hours to a day. However, for some lenders the whole process could take a couple of days.
Early repayment. It is normally possible to repay part or all of your loan early at any time, and in doing so, save money in interest. You should check that this is the case before taking out a short-term loan.
Paid back by CPA. Short term and payday loans are typically paid back using a Continuous Payment Authority (CPA) but you can sometimes opt to pay by direct debit or manually.
Benefits and drawbacks of a £100 short term loan
Quick turnaround time. Need cash quick? Many lenders are able to get you your loan the same day you apply. They typically give quick decisions on whether you’ll be accepted for your loan and if accepted, some lenders are able transfer funds within minutes.
Easier approval. It is often easier to get approved for a small short-term loan from a specialist lender than a large and long personal loan, or a credit card, from your bank. Some lenders specialise in providing loans to those with poor credit, by focusing on affordability rather than your credit score.
High interest rates. Short-term loans typically have very high interest rates compared to other forms of credit. It’s important to pay your loan off as soon as you can afford to. Doing so will normally save the amount you pay in interest.
Disreputable lenders. Not all lenders are reputable – these companies may try to take advantage of people who are in need of quick cash. Make sure you check a lender has been approved by the financial conduct authority (FCA) before you apply.
Eligibility requirements
You should only apply for a £100 payday/short-term loan if you’re certain you can meet the repayment terms. While the eligibility requirements may vary depending on each individual lender, you’ll generally need to meet the following criteria:
Be aged 18 or over.
Be a UK resident.
Hold a bank account.
Have an email address and mobile number.
Have a regular income.
What is a Continuous Payment Authority (CPA)?
A CPA is a recurring payment in which you give a company permission to withdraw money from your account on a regular basis.
CPA differs from direct debit because they give the company being paid the ability to withdraw money from your account whenever they wish, and to take payments of different amounts without consulting you. Most payday loan companies will use CPA to collect your repayments, however you can cancel this at any point by either consulting with your provider or your bank.
Frequently asked questions
If you take out a short-term loan, this will normally be visible on your credit report. If you keep up to date with your repayments your credit score shouldn’t be affected. It’s important to only take out a loan if you’re confident you can afford it. If you default on repayments then your credit score could be severely damaged, making it harder for you to secure credit in the future.
It is possible to pay back part or all of your loan early – doing so will normally save you money on interest. It is a good idea to check the early repayment terms of a specific product before you apply.
You are likely to need to provide information on some or all of the following: employment, income and expenditure, bank account, contact details.
You have the right to cancel your loan within 14 days of receiving it. If you do so you’ll need to immediately pay back your full loan.
If your application is declined you may try again at any time, but the outcome will not change unless your circumstances have. Remember that multiple applications for credit in a short space of time could put off prospective lenders in the future.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.
Chris Lilly is a publisher at finder.com. He's a specialist in credit-based products including business and personal loans, mortgages and credit cards, and is passionate about helping UK consumers make informed decisions about their borrowing. In his spare time Chris likes forcing his kids to exercise more.
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