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.
Get up to £3,000 when you need it with a Drafty credit line
- Get ongoing access to a flexible line of credit
- Find out if you’ll be approved without affecting your credit score
- No late fees, no early repayment fees
- Sending funds to your bank within 90 seconds of approval
Representative example: Borrow £1,200 for 12 months at a rate of 65.7% p.a. (fixed). Representative 89.7% APR and total payable: £1,601.40 at equal instalments.
What is Drafty?
Drafty is a direct lender (not a broker) authorised and regulated by the Financial Conduct Authority. It offers borrowers ongoing access to a line of credit of up to £3,000 that they can borrow against quickly and easily when necessary.
Drafty is a part of GAIN Credit LLC, a popular US-based lender which also owns Lending Stream. Launched in 2015, It markets itself as an innovative and flexible alternative to expensive short term loans or overdrafts.
How does Drafty work?
Unlike regular short-term loans, Drafty actually offers a line of credit account in which you only pay interest on the credit you use. You aren’t given a set repayment schedule, and can continue to access your credit limit for as long as you want, provided you make your minimum monthly payment.
You can draw on any credit you currently have and the funds can be sent to your bank in under 90 seconds.
Is Drafty a payday loan
No, it’s not. However, it is designed to fulfil a similar function – namely a means to borrow relatively small amounts of money quickly, when you find yourself a little short.
With a representative APR of 89.7%, it’s cheaper than traditional payday loans – falling below the Financial Conduct Authority’s 100% APR threshold for “high cost short term credit”.
Key features of a Drafty line of credit
If you’re approved for a Drafty line of credit, you’ll be given a credit limit and immediately be able to access the facility either on Drafty’s website or via the Drafty app.
|Product Name||Drafty Line of Credit|
|Available Amounts||£50 to £3,000|
|New customer maximum||£3,000|
|Loan terms||Open-ended line of credit|
|Soft search eligibility check|
|Employer contacted during application|
|Funding speed||Drafty says it aims to send the cash from your credit line to your bank within 90 seconds.|
|Repayment period options||Monthly|
|Default repayment method||Continuous payment authority|
|Additional repayment methods||Online payment|
|Repay early at any point|
|Parent company||GAIN Credit|
|FCA registration number||689378|
|Link||Go to site|
How much does Drafty cost?
The precise cost of your Drafty line of credit will depend on how you use the account. Although you might be given a credit limit as high as £3,000, you’ll only pay for the amount you draw down, and only for the days on which you owe Drafty money. The interest you’ll incur is 0.18% daily, and Drafty’s lines of credit have a representative APR of 89.7%.
The minimum you must pay back each month is either £50 or 6% of your balance plus any interest you’ve accrued – whichever amount is greater.
So for example, if you borrowed £100 and paid the minimum monthly amount required, it would cost you £109 (£9 in interest) and you’d clear the debt after three months. You’d pay £50 after one month (which would include around £5.50 in interest), another £50 a month later (which would include £3.05 in interest) and a final payment of around £8.55.
However, if you were able to repay your £100 early – say after 14 days – it would have cost you 18p per day for 14 days. That’s an impressively-low £2.52 in interest.
As you only pay interest on the credit you use, a Drafty credit line can work out much cheaper than, say, traditional payday loans, for example. However, if you were to borrow £2,000 or more and then only make the minimum payment each month, you could end up being in debt for a couple of years and paying a four-figure sum in interest.
Pros and cons of a Drafty credit line
- No hidden fees
- Fast funding
- Only pay interest on what you use
- Convenient once set up
- More competitive rate than many payday loans
- May be harder to get approved for than some payday loans
- Be wary of only making minimum repayments and letting your debt drag on
- Because the line of credit it always there and available, you might be tempted to borrow when you otherwise wouldn’t
Am I eligible for a Drafty Credit line?
You should only apply for a Drafty credit line if you’re certain you can meet the repayment terms. You must also meet the following criteria:
|Min. income||£1,250 a month (you must be paid monthly to be considered for a line of credit)|
|Additional eligibility notes||You must have an active bank account and debit card.|
|Link||Go to site|
How do I pay back my Drafty credit line?
Like most short-term credit providers, Drafty uses a continuous payment authority (CPA) to collect a minimum monthly repayments from your bank account. You can also make additional payments (or even pay off the credit line in full) at any time, without being charged a fee.
How do I apply for a Drafty line of credit?
Does Drafty do a credit check?
Yes. As a responsible lender, Drafty will run a “hard” search of your credit file as part of its affordability analysis. However, it also states that it’s interested in more than just your credit history, and will review your unique situation in considering your application.
From then on, you won’t be subject to further “hard” credit checks, but as long as your account remains open, Drafty is able to monitor your credit situation without harming your credit file in any way. So if your financial circumstances change significantly, Drafty will probably know about it.
Does Drafty affect your credit score?
When you first apply for the credit line, Drafty will run a search of your credit file. These have a small (and usually short-lived) negative impact on your credit score.
If you go onto borrow money using your credit line, and then make at least the minimum monthly payments on time, then this should benefit your credit score as you’re demonstrating that you use credit responsibly.
|Option to change repayment date|
|Repay early at any point|
|Repaying early can reduce overall interest|
|Phone number||0203 695 8072 (Call charges apply. Standard charges from BT landlines, mobiles and other providers may vary.)|
|Link||Go to site|
Is Drafty any good?
If you’ve used payday loans in the past, and think you might again in the future, Drafty is likely to be a significantly cheaper option.
While a fixed-term loan can be easier to budget for, products like Drafty’s innovative credit line offer the flexibility to borrow as much or as little as you need, as and when you need it. So it’s quick and convenient.
Provided you have the good self-discipline to only use the facility occasionally, for unexpected and unavoidable costs, and don’t let the debt drag on, it’s a smart way to borrow.
It’s not the only alternative to a payday loan – you may wish to consider a credit-builder credit card, an authorised overdraft, or any of the options outlined by the government’s Money Advice Service.
Other frequently asked questions
More guides on Finder
Sites like Drafty
Drafty provides an ongoing line of credit designed as an alternative to payday loans and expensive overdrafts.