What Is a Payday Loan or Short-Term Loan?

When you apply for a quick loan, the money could be in your bank account in less than an hour. Also known as fast loans, these are often small loans that you’ll request online without a lot of paperwork.

It doesn’t take long to apply for quick loans. In most cases, you can apply in less than 10 minutes and approval for your loan might be instant. You could have the money in your bank account in less than an hour.

What Is a Payday Loan?

Quick personal loans offer fast approval as they use a computer algorithm to check your affordability and credit score. If you have a score that's on the border of acceptability it'll be checked by a human before a decision is made.

A computer algorithm might check your application and decide if you’re approved for a loan. In more complex cases human input is needed, though you’ll often still receive a decision and your money within 24 hours.

Read on to learn all about quick loans.

Looking for other information on Loans? This guide has info on 'How do quick loans works?'. We have also writen extensively about:

• - Dangers of fast loans
• - What is a logbook loan?
• - Are logbook loans safe?
• - What happens to my loan if I die?

We update all our guides regularly. If you are researching loans and we haven't got an exact guide that helps you, keep coming back as we update daily.

How Do Personal Loans Work?

Loans don’t just drop into your bank account. First, you’ll have to apply. All loan applications cover the basics, but some are more detailed than others. You’ll be expected to give an insight into your financial situation. Lenders will usually check your credit file and your credit score will influence approval.

For quick loans, with speedy approval, there are extra risks for lenders. These lenders don’t spend as long reviewing applications, so they may approve loans that other lenders will not. In exchange for this risk, they’ll usually charge higher interest rates.

Once your loan has been approved, the money will be sent to your bank account. You’re able to spend it on whatever you need, even withdrawing it from an ATM for places that you can’t pay on card.

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The Speedy Growth of Quick Personal Loans

In the financial industry, quick loans are referred to as ‘High-cost short-term credit' (HCSTC if you prefer the ‘snappy’ shortened version). And over the past few years, they’ve grown in popularity rapidly.

In the latest data available in studies, the number of people with a form of HCSTC grew from 1.259 million to 1.457 million between Q2 of 2017 and Q2 of 2018 – a growth of almost 16% in just one year.

How Do You Apply for a Quick Personal Loan?

You can apply for a quick loan online. You don’t even need to be near a computer, with many lenders having their own smartphone apps. The application process is quick and easy, with minimal evidence required. You’ll have to provide some financial information and some personal details, perhaps taking photographs of ID documents to support your loan application.

In many cases, fast loans are approved or denied by computers. If you don’t meet the loan requirements, your application gets rejected straight away. Computers crunch the numbers and quickly decide if you’ve been approved for a loan. The whole process might take as little as 10 minutes.

You’ll be able to clearly see the terms of the loan you’re applying for. You’ll decide how much you borrow and how long you’d like for repayment, within the lender’s limits. You’ll see how much you’ll need to pay each month and when you’ll have paid off your loan.

Quick loans are designed to be simple, easy and convenient. This can be a good thing, but quick access to money can also bring some risks for borrowers.

Quick Loans As Personal Loans

Quick loans are personal loans, though they may not be what you’re used to. If you ask yourself ‘What is a personal loan?’, you’ll probably first think of borrowing money from the bank.

How do bank loans work? A little differently! If you ask the bank for a personal loan, the process is often more in-depth. Banks usually review each loan application without relying on computers for decisions, so even if you apply online you’ll need to wait longer for your money. In some cases, you’ll get your money the same day, but this is nowhere near guaranteed.

If you need money now, quick loans can be very appealing.

Quick Loans and Payday Loans

Almost all payday loans are quick loans, but quick loans aren’t always payday loans.

Payday loans usually have very short repayment terms, intended to bridge the gap between one payday to the next. You may find that you get quick loan approval for a much longer-term loan, so you’ll get the money just as fast but have longer to pay the money back.

Who Might Quick Personal Loans Be Good For?

Quick loans are often easier to get. They’re good for people that favour convenience or struggle with lengthy applications.

Where personal loans work for most people, and the application process can give you time to think and make sure that you’re suited to borrowing, quick loans are preferred by those that want their money without jumping through too many hoops.

Quick loans are particularly popular with students, applying online from their homes. Modern consumers expect convenience, and this extends to their loan applications. They don’t require you to have folders full of paperwork and speak to an employee in person.

This convenience is appealing, but for students, it can be all too easy to overspend on a night out. When you can apply for a loan at 10 pm and get the money in your bank within the hour, it can be hard to control your spending and stick to your budget each week.

With traditional student loans providing large sums of money at the start of each term, quick loans can be used to top up your bank account when needed. You don’t need to be a student to apply for a quick loan. You might also benefit if you’re disabled, feel nervous about lending or simply need to get your money quickly.

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Are Quick Loans Good or Bad?

Quick loans can be very helpful. If you need money quickly or want a fast decision, it’s great to have that option available. But, be aware that quick loans often come with higher interest rates.

Watch out for payday loans with short repayment terms that can leave you in financial trouble. Also watch out for the temptation that comes with the offer of quick and easy money.

Personal loans are usually approved after banks have run several checks. Banks and loan providers carefully evaluate how suited to borrowing you are. With a lengthy application process, you’ll have time to make sure that you’re happy with the loan terms.

With a quick loan application, there aren’t as many steps between you and the money in your bank. If you’re applying for quick loans, don’t get too carried away.

Are Quick Loans the Same As Personal Loans?

Quick loans are a form of personal loan but are usually for small amounts of money. As lenders take additional risks, they’ll typically lend no more than £1,000. Other personal loans can be much larger, with banks lending upwards of £50,000 if you meet the lending criteria.

There are other differences between quick loans and other personal loans. When you apply for a quick loan, it’s very unlikely that you’ll be asked how you’ll be spending the money.

Banks and other lenders may be a bit stricter, wanting to know how you intend to spend the funds and making sure that they’ll be used on something sensible.

Quick Loans for Emergency Cash

The main benefit of a quick loan is that it’s good for emergency cash. If your freezer broke, a quick loan could help you to replace it the very same day. If your car broke down, you could borrow money to pay for roadside rescue.

Quick loans have several benefits, but also a few drawbacks. If you’re easily tempted and spend money on impulse, it doesn’t help to have it readily available.

Quick Loan FAQs

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How Can Money Savings Advice Help You With Getting a Loan?

Here at Money Savings Advice, we have partnered with some of the UK’s leading loan broker companies. They have already helped thousands of people get the best loan that suits their needs, and they can do the same for you.

Choosing an independent loan broker means they won’t proceed with an application unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these loan brokers who can help you get a loan, then click on the below and answer the very simple questions.