Instant cash loans are short-term loans used as a solution when you are cash-strapped. These loans, with not more than £1,000, carry high interest rates and are required to be paid off in one fell swoop. Whether your car has broken down or your laptop needs to be repaired, instant loans could be the best bet.
Instant loans provide an instant injection of cash during financial emergencies.
What makes cash loans instant cash loans?
Cash loans are called instant loans, and they are approved the same day you put in a loan application. The processing of these loans is so fast that it takes only 10 minutes to transfer funds to your bank account after the completion of the whole loan process. Having said that earlier, instant loans are small loans required to be discharged in full once and for all. Lenders make the lending decision based on the income details you provide in your application.
Formalities of checking your credit file are not part of these loans, and therefore, they consume less time. Some lenders may or may not ask you to send a copy of your bank statement or pay slips for the previous three months. Once the decision is made, the next thing you see is that your account is credited with a loan.
Just because instant loans obviate the need for a hard check, it does not insinuate that you are immune to refusal and rejection. Henceforth, there is no such thing as instant cash loans with guaranteed approval. No lender can ever guarantee approval without checking your credit history and income sources. If a lender comes across to you as too good to be true, you should be wary of them. There could be some red flags. Such lenders are called loan sharks. They could throw you into an abyss of debt.
While a responsible lender is supposed to determine your repayment capacity when approving your loan application, you should not just remain dependent on their judgment. You should carefully check your repayment capacity to ensure that you will not struggle to keep up with payments.
You cannot make an affordability complaint against an unregistered lender because it was your responsibility to check it in the first place. However, at the same time, it is worth bearing in mind that you cannot abdicate your responsibility on grounds that you borrowed money from a loan shark or an unauthorized lender. Defaults on loans from unregistered lenders will have the same impact on your credit score and finances as any other loan from a registered lender.
Key features of instant cash loans
Instant cash loans are also known as emergency loans with guaranteed approval from a direct lender online. Here are the key features of these loans:
The loan amount varies from £1,000 to £3,000. Hardly any lender would feel inclined to lend you more than that. Most of the lenders put a cap of £2,500.
Because you have an opportunity of borrowing up to £3,000, it does not imply that you cannot be turned down. A lender will scrutinize your repayment capacity, and if they find that you are borrowing more than your affordability, they will refuse the loan.
The repayment length, depending on the size of the loan, varies between 14 days and 12 months. Instant cash loans are similar to payday loans, as the loan amount is too small, and they are also paid off in one fell swoop. Loans worth more than £1,000 are paid off in fixed instalments.
The APR of these loans is usually up to 1200%. The APR includes processing fees and associated charges. You should be very careful while using these loans because there is a risk of falling into an abyss of debt.
Watch out for fees. They vary by lender. Some lenders charge monthly fees, while others do not. Processing fees are applied to everyone. Your loan agreement bifurcates the fee structure. Read the small print carefully before signing it.
No hard check is run when the loan amount is not more than £500. There is no risk of losing your credit points. A hard check is basically run when you are to borrow a larger sum. You will lose some credit points, but your score will recuperate as soon as you start making points.
The eligibility criteria for instant cash loans are the same as for any other loans. You must have come of age, be a resident of the UK, and have a stable income source. Freelancers and self-employed can also apply for these loans.
Your poor credit history will not get in the way of borrowing money. Instant cash loan providers accept applications from subprime borrowers as well. However, your credit score cannot be lower than the bare minimum they have set for approval.
These loans are unsecured loans. They are not subject to collateral. No guarantor is needed despite a less-than-perfect credit history.
Upsides and downsides of instant cash loans
Here are some pros of instant cash loans:
Cash will be readily available. As they are not subject to complex processing, they are approved faster than other loans. Mostly, you are likely to receive funds the same day you put in a loan application.
Applying for these loans is simple. You are required to provide details of your income and expenses. The decision will be made within minutes.
Subprime borrowers can also apply for these loans.
No upfront fees or hidden fees are charged.
Here are some risks related to instant cash loans:
They charge high interest rates, especially if your credit rating is not stellar.
A lump sum payment of these loans on the due date makes it quite risky for you to afford the payments. You will most likely end up rolling it over, accumulating debt.
Late payment fees and interest penalties are charged when you miss a payment. These charges quickly snowball into problem debt.
They are not suitable for recurring expenses, for instance, rent and groceries. Lenders suggest that you apply for these loans only for one-off, non-recurring costs, such as a car repair.
Affordability checks are strict for those looking to borrow more than £1,000. There is a high probability of being rejected.
These loans cannot help improve your credit score, especially if they are to be paid off in full in one go, but they can ruin your credit score if you fail to make payments on time.
Steps to improve your application success
Here is how you can improve your application status:
Check all details you provide in your application form. Make sure that it does not consist of any discrepancies that result in rejection.
Check your credit report does not record any accounts that you do not recognise. If there are any errors, dispute them.
Try to discharge all outstanding debts before applying for instant cash loans. When you do not have any other debt, your chances of getting approval are high.
Borrow as per your affordability.
The final statement
Instant cash loans can be used to meet any kind of emergency expenses when you are in a tight spot. However, make sure that you can easily afford to repay these loans, as they charge high interest rates and the repercussions of defaults are far-reaching.
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