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Small Loans

Small loans are cash loans designed for people who have a poor credit rating and who need to borrow money to cover an unexpected financial emergency. On this page, we'll share with you everything you need to know about small personal loans and how to apply for one even if you have a bad credit score.

What are small loans?

Small loans are available to borrowers for amounts of between £100 and £10,000.

For loans of £1,000 or less, borrowers can repay over a period of three months, six months, or twelve months. For loans of £1,001 or more, borrowers can choose to repay over a period of time between three months and thirty-six months.

What are small loans used for?

Small loans, sometimes called short-term loans, are offered by lenders to borrowers who need access to cash in a hurry.

The typical reasons why a borrower would apply for a small loan include:

  • to repair their car following a breakdown
  • to repair or replace a faulty boiler
  • to repair or replace faulty white goods
  • to cover unexpected medical expenses (for example, dental procedures not covered by the NHS)
  • to meet a vet bill (if their pet is not insured or if the insurance policy does not cover a specific illness or condition)
  • to pay for funeral expenses

Please remember that small loans are an expensive form of borrowing and that you should only consider applying for this type of finance if you're unable to secure the money you need from another source.

Before applying for a small loan, you may wish to consider:

What types of small loans are there?

There are various different types of borrowing you might want to consider including:

  • personal loan - an unsecured small loan made to a borrower.
  • pawnbroker loan - a loan secured against an item of value like jewellery, white goods, home entertainment system, and so on.
  • guarantor loan – a type of loan where someone else agrees to meet any repayments you miss or, in the worst case, pays off the entire balance of the loan if your account goes into default.
  • credit card loan - a loan drawn down from the available balance on your credit card.
  • logbook loan - a loan secured against your car
  • payday loans - a payday loan is generally a type of loan which you pay back all in one go on your next pay day. Most payday loan customers choose to repay their loan on the day they next receive their wages.

What is the cheapest way to borrow money? It really does depend on your personal circumstances.

So, it is always a good idea to make sure that, before you commit to anything, you examine and compare each available option open to you to discover which type of loan offers the very best deal for you.

How can I get a small personal loan?

You can apply for a small loan either:

  • via a broker like Little Loans or
  • direct from a lender

Can I get a small personal loan with bad credit?

When you approach one of the many finance companies on the market which offer small loans for bad credit borrowers, they'll assess your eligibility based upon a number of different factors.

What are those factors which affect your eligibility?

  • proof that the loan is affordable - in particular, can you afford to repay the loan each month and still have money left over? No lender would knowingly approve a loan which would push a customer into hardship or make it difficult for a customer to pay important bills (like mortgage, rent, council tax, utility bills, and so on)
  • what’s on your credit report- your credit report is a record of your financial history over the last six years. It shows how much debt you're currently in, how much debt you have available to you that you actually use, any missed or late repayments, and so on.
  • ease in contacting you- lenders want to know that it'll be easy to contact you once you've agreed to take a loan from them. As well as needing to know your email address and mobile phone number, they'll need your address history for the past three to five years. Please make sure that you're on the electoral register at your current address. If you aren't, you can sign up by clicking here.
  • current and valid banking arrangements - lenders will need your current account number and sort code as well as the details of a debit card that is linked to your current account. They need this in order to be able to transfer the cash to you as well as to collect your monthly repayments.

If you’ve had financial problems in the past, you'll understand that the choice of lenders open to you will be limited compared to someone who has a higher credit score.

Please understand though that all loan approvals are subject to status and we cannot guarantee to find you a lender.

How to apply for a small loan through us

We're a broker and not a lender. We have a panel of lenders and, for each lender we work with, we know the types of loans the lenders like to make and the types of customer they like to work with.

Just below, we explain exactly how we work and how what we do benefits borrowers looking for small loans in a hurry to cover a financial emergency or to meet an unexpected bill.

Our small loans application form

Our application process is all online. And because it's online and it's automated, you may receive an offer for the amount you need in just a few minutes from now (subject to status).

The first step is to fill in your online application form answering questions on the following:

  • the amount you want to borrow - please make sure that the loan (and any savings you might use in addition to the loan) will cover the expense that you need to meet in full
  • the term of your loan - the period of time you want to pay your loan back over. A longer period may mean smaller monthly repayments, but you'll pay more in interest over the life of your loan
  • your monthly income
  • your monthly expenses
  • your current employment
  • your address history
  • your bank current account and sort code

Once we have all this information, we then get to work.

We match you to the lenders most likely to want to work with you based on:

  • Your affordability,
  • the amount you want to borrow, and
  • how long you want to pay back the loan over.

How do bad credit lenders assess affordability?

There is an affordability assessment included on your application form. What finance companies want to find out when you apply is something called your "disposable income" - that's how much money you've got at the end of the month after all your bills are paid.

When you apply, we'll ask you to share details with us about how much you earn, how often you're paid, and your monthly take home income after tax.

We'll also ask you for details on how much you pay per month on any existing loan repayments, your utility bills, your transport costs, your food costs, and your other monthly expenses.

Let's say that we work out your monthly disposable income is £500.

If you want to take out a loan whose monthly repayments are really close to that £500 amount, some finance companies might say "no" because:

  • there is a chance that you could experience hardship as a result of making the repayments and
  • the risk of your not having enough money to make a repayment in full on the agreed dates is too high.

Lenders want to see as big a difference as possible between your disposable income and the size of the repayments on the small loan you want to take out.

Although this is certainly not the only factor, they use to make a decision on a small loan application, "disposable income" is very important to lenders.

How we choose a suitable lender for you

We'll contact each lender in turn on our panel where we believe the details you've provided us with about yourself means there might be a strong match between you and what a lender's preferred type of borrower is.

Each lender we contact will run a soft credit check on you. Only you can see soft credit checks on your credit report, and they have no effect at all on your credit score.

When the first lender gets back to us and they indicate that they may approve your request if you apply to them, we'll automatically re-direct you to their website. Please note that we cannot always find a lender for every borrower who applies with us.

Share your details with the lender

When you're at the lender's site, please complete their online application in full. Once you've done that, a hard credit search will be run on you.

You should get the decision on your application for a small loan from the selected lender within minutes.

You may be offered:

  • the full amount you're requesting,
  • an amount less than you've asked for, or
  • your application may be rejected.

Reviewing your lender's offer

Please remember that, because lenders offer small loans to customers with bad credit scores, there is a higher rate of default on these types of loans.

To cover losses on these loans, a small loan provider charges higher interest rates which may seem quite expensive compared to loans you might be offered by a high street bank, for example.

You should look for four things on your lender's offer before you decide whether it’s right and manageable for you:

  • monthly repayments - are they comfortably affordable to you?
  • fixed interest rate - are you happy with the rate of interest? Please note that, subject to status, any offer made may be lower or higher than the representative APR displayed on the lender's website
  • late charge - you may be charged extra if you are late with or miss a payment. Not all lenders make late charges but, if yours does, are you comfortable with the level of the charge?
  • quick settlement fees - if you pay off your loan early, you will save money in interest. If you do this, some finance companies may charge an early settlement fee on their loans. Are you OK with that?

Accepting a lender's offer

Before you accept your lender's offer, please carefully read and understand the terms and conditions of the small loan you're agreeing to.

When you click or press the button to accept the offer, you will enter into a legally binding agreement with your lender which will be governed by those terms and conditions.

If you are happy to proceed, let the lender know by accepting the offer. You should then receive the money in your bank account within minutes*.

Advantages of choosing a broker to search for loans

Why choose a broker over going direct to a lender for a small loan?

  • saves time - you'll fill in no more than one or two application forms. Compare that to how long it would take finding lenders' websites yourself and then having to complete application forms on each one.
  • saves frustration - there's no way of knowing in advance whether you're the type of borrower a lender wants to work with.
  • only one hard credit search - applying to lender after lender yourself increases the number of hard searches against you on your credit file. This negatively impacts your credit score and a lower credit score makes it harder to find a finance company happy to approve you. With a broker you can have only one hard check and that is only if you decide to go with the application.
  • paid out in minutes* - small loans providers often send the money within minutes* after you've agreed to their offer.

Managing your account after you've received the money

Your credit score may improve if you manage your small loans account well after you've received the money from the finance company.

The three golden rules of successful small loans account management are:

  1. to make sure there is enough money in your account when a repayment is due to avoid paying additional charges
  2. to provide your lender with any change of address, email address, or telephone number as quickly as possible
  3. if you think you're going to struggle to meet the next repayment, please get in touch with your lender straight away.

Are you concerned about your level of borrowing?

If you are concerned about the level of debt you're managing, it may be better to talk to someone about it before you increase your indebtedness further by taking out a small loan. You may benefit by speaking to a professional free of charge in one of the following debt help organisations - StepChange, PayPlan, National Debtline, the Debt Advice Foundation, the Money Advice Service, and Citizens Advice.

Applying for a small loan with Little Loans

Our secure, online applications process is easy to use, and you won't have to wait around to find out whether you've been approved for a loan or not.

We charge borrowers no fee and there's no obligation to take out any offer made to you by one of our lenders.

For your peace of mind, we are authorised and regulated by the Financial Conduct Authority (FCA).

Check out our 4.8 star rating on Feefo

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Straight forward

“Easy pleasant service, quick decision and easy account management.”

Laurissa Marsden

Representative Example: Amount of credit: £1200 for 18 months at £90.46 per month. Total amount repayable of £1628.28. Interest: £428.28. Interest rate: 49.9% pa (variable). 49.9% APR Representative. We’re a fully regulated and authorised credit broker and not a lender