Short-term Loans and High-Cost Credit

Short-term Loans and High-Cost Credit

Short-term Loans and High-Cost Credit

What is a Short-term Loan?

Sometimes, a short-term loan is referred to as “High Cost Credit” – this means it is designed for people whose credit rating might not be good enough to be accepted for a traditional loan.

Because short-term loans are designed for people with lower credit scores the risk is higher for the lender so they might increase the interest charged to mitigate against the higher risk.

The higher costs involved means short-term / high cost loans are only designed to help meet unforeseen expenses over a short period making it unsustainable for long-term financial problems.

If you are experiencing more long term financial problems there are a number of not-for-profit organisations that can help or advise you:

  • National Debtline
  • Stepchange Debt Charity
  • Citizens Advice Bureau

What do QuidMarket offer?

Here at QuidMarket we have been helping hardworking people through short-term financial difficulties since 2011. Our short-term loans can go from £300 – 600 for between 3 and 6 months for new customers. Repeat customers can borrow from £200 – £1,000 for between 1 – 6 months.

When applying for the loan, the total amount to repay is clearly visible before you finalise the loan agreement so if you are not happy with anything after seeing the amount you need to pay back you can stop the application with no obligation to make any payments to us that you have deemed unaffordable or unacceptable. You would also have to sign your loan agreement, which clearly shows repayment schedules before you accept the loan.

Why choose a short-term loan?

The quick and easy application process is all done online making it ideal for short-term needs such as an unexpected bill or an emergency car repair or when you need cash in your account quickly.

Our team of underwriters process the applications as soon as they are completed and so a decision is normally made on the same day. If accepted, the cash is sent to your nominated bank account on the next available funding run.

As QuidMarket is now fully approved and regulated by the FCA you can rest assured all applications are carefully considered and processed according to the rules and regulations set out by them, including an affordability assessment based on the customers’ income.

As QuidMarket short-term loans are flexible you can choose the amount you want to borrow and the repayment period that suits you. Use the sliders on the homepage to see how different loan amounts and number of instalments can affect your monthly repayments.

Who can apply?

To qualify for a QuidMarket short-term loan you must:

  • Live in the UK
  • Be over 23 and under 65 years old
  • Have a mobile phone
  • Have a UK bank account with a valid Debit Card (we run a verification check that takes 1p)
  • Have a job and take home at least £1,000 a month

Is QuidMarket a Direct Lender?

Yes, QuidMarket is a direct lender. This means if your application is successful, we will deposit the funds into your nominated bank account and with whom you will enter into a Credit agreement.

This gives extra protection as all lenders in the UK are regulated and authorised by the Financial Conduct Authority (FCA).

Because you are dealing with a direct lender and not a broker, your details are stored securely and any third party companies offering products will never contact you off the back of us sharing your information.

It is usually cheaper for the customer too as there are no broker fees or hidden costs involved. Sometimes a broker’s website may look like a lender and so a customer may be inadvertently charged by the broker for their services of passing the application on to the lender.

What is Bad Credit?

Every adult has what is known as a “Credit Score” – this is based on a number of factors including repayment history (if the payments were made on time, amount of payment etc), the amount borrowed and the amount owed which is then looked at against the amount of money coming in from wages etc.

Everybody’s Credit History is logged with Credit Reference Agencies (CRA) and is used to produce a Credit Score. Lenders will use the credit score obtained from a CRA to help them make a lending decision.

By having a low credit score traditional lenders will see the applicant as a higher risk and so may not be able to offer a service. In the short-term loan market emphasis is put on the amount a customer repays on each instalment and the affect these individual payments will have on the financial health of the applicant.

Therefore, having a low or bad credit rating may not necessarily mean the customer will be refused credit.

Short-term Loan – Good or Bad?

As Short-term loans generally cost more to repay it can be seen as a disadvantage when comparing to more traditional types of credit when working out percentages and APR.

However, as the loan is paid off a lot quicker than a traditional instalment loan the amount to repay on each instalment should be affordable. If used correctly short-term credit can be a cost effective way of helping customers through short-term financial hardship.

The main positive aspect of a short-term / pay day loan is that they can often be an only source of funds to help what are sometimes can be quite distressing times for many hardworking families. As funds are transferred the same day short-term / pay day loans can sometimes be the difference between a bill being paid, the car being repaired or, as desperate as it sounds, food in the cupboard or a pair of school shoes being bought.

Another positive aspect of using short-term / pay-day loans is they also report to the same CRAs and so can often be seen as “Credit Builders” meaning a person with a low or bad score can still obtain credit and if their finances and repayments are managed correctly, their rating will improve thus opening up more sources of credit.

How affordable is a bad credit loan?

Income and outgoings are factors of affordability. If you earn enough and your outgoings fit, and we deem you able to pay back the loan instalment based on your amount of disposable income.

The information provided by the customer at the point of the application is used alongside information obtained from a CRA and other lending policies we have internally at Quid Market to make a decision.

It is therefore important that clear and accurate information is provided on the application form as this enables the lender to make an accurate and fair lending decision.

How can I check my credit score for free?

It is important you regularly check your credit score as knowing what is on there can help you find the best form of credit to suit your needs and may work out cheaper.

By checking on a regular basis you can also find out if there are any errors in the information logged against you, for example incorrect addresses, joint accounts that are no longer valid, unfair defaults logged and any old, now unused credit cards or store cards – all these can have an negative effect on your credit file.

It is important to check your credit file on different credit reference agencies as different companies register information with different agencies so they may all hold slightly different information about you.

There are a number of ways of checking your Credit Score for free, including:

  • Experian
  • Check My File
  • Credit Report
  • Totally Money
  • Clear Score

Here is a guide to obtaining your Credit Report and what information is held on there:
https://www.moneysavingexpert.com/loans/check-free-credit-report

Will my application for a bad credit short-term loan be affected by my credit score?

Short-term alternative lenders use a variety of factors when assessing an application for credit. Your credit score will have an effect on the decision but the main thing lenders take into account is the affordability of the instalments against the income of the applicant known as an Affordability Assessment.

If the instalments are deemed unaffordable the company may offer alternative terms, for example a lower amount or a longer loan duration to make the repayments more affordable.

As each application for credit is underwritten based on the information held against the individual it is impossible to say before the application is assessed what effect the person’s credit score will have on the application.

QuidMarket is a direct lender and so there are no broker fees/charges helping us keep the costs down to you, the customer.

QuidMarket is fully registered and certified by the Financial Conduct Authority (FCA).

Please check out our reviews to find out why we were given a 5 Star Rating at Trustpilot.