A bad credit payday loan is a loan that’s required to be repaid within a month and could be accessible to people with a history of bad credit.
If you’re looking for some help to plug a hole in a financial emergency, please know that a payday loan may not necessarily be your only choice. If you’d prefer to spread the cost of borrowing over a longer period, a short-term loan for bad credit could provide a suitable bad credit payday loan alternative.
CashLady is a credit broker. We work with a panel of over 30 direct lenders, all of whom are based in the UK and are authorised and regulated by the Financial Conduct Authority (FCA). If you’d like to search for a short-term loan as a bad credit payday loan alternative, we could help you look.
In our guide, we’ll look into the differences between bad credit payday loans and bad credit short-term loans and explain a little bit more about what we do.
What causes a bad credit score?
Bad credit can be caused by several factors, and not all of them are a fault of the individual. For example, bad credit could be a result of being a victim of fraud or identity theft.
Commonly, bad credit history could be a result of mismanagement of past financial commitments, such as missed or late payments on things such as credit cards, loans, mortgages, and bills.
Things like incorrect information on your credit file, using a credit card to withdraw money from a cash machine (known as a cash advance), and even moving house often could contribute to a decline in your credit score.
A bad credit score could limit your borrowing options when it comes to applying for credit, although the good news is that having bad credit doesn’t automatically mean that your application will be rejected.
Can I get a payday loan with bad credit?
You could get a payday loan, even with a history of bad credit. It’s also worth noting that you could also be considered for a bad credit short-term loan. Several of the lenders on the CashLady panel specialise in short-term loans for people with bad credit.
When applying for a bad credit loan, you may be presented with a higher rate of interest. A bad credit score could restrict the amount of money you can borrow, meaning that you might be offered a lower sum instead.
Bad credit payday loans vs bad credit short-term loans
While bad credit payday loans and bad credit short-term loans share some similarities, they are different products. We’ve compared some key information about each type of loan in the table below.
| Bad credit payday loans | Bad credit short-term loans |
|---|---|
| Bad credit history considered. | Bad credit history considered. |
| Could come with a higher rate of interest. | Could come with a higher rate of interest. |
| Typical set repayment term of one month. | A range of repayment terms available. |
| Not as easy to find nowadays, following the introduction of tighter rules surrounding fairer lending, imposed by the Financial Conduct Authority (FCA) in 2014. | Multiple UK-based lenders offer short-term loans for bad credit. |
| If approved for a bad credit payday loan, your money could be sent the same day.* | Many lenders of short-term loans could send the funds on the same day your application is approved.* |
| CashLady does not work with any lenders of payday loans. | CashLady works with a number of lenders who specialise in bad credit short-term loans. |
*Payout timescales vary between lenders. The time it takes for the money to become available in your account will depend on your bank’s policies and procedures. Please note that this is the case for both payday bad credit loans and short-term bad credit loans.
Should I apply for a bad credit payday loan?
Only you can answer this question.
A payday loan could be useful to help cover the cost of an unexpected expense if you’re confident that you can afford to repay it.
You should not apply for any type of loan if you’re in any doubt whatsoever that you’ll be able to afford to repay the money you owe.
Taking out a loan that you can’t afford could lead to financial stress, money problems, and a spiral of debt. This will also hurt your credit score, which could affect your chances of being considered for credit in the future, should you need to apply again.
Does taking out a loan imply I have bad credit?
No, applying for a loan does not directly point to bad credit or financial problems.
Not all of us have the immediate funds needed to pay for a large, unplanned expense, such as a vet’s bill or a broken boiler. If we don’t have the savings, and we’re unable to borrow money from family and friends, we might consider searching for a loan.
This alone does not imply that you have a bad credit score.
Do I need a guarantor to apply for a bad credit loan?
If you have bad credit, you might have wondered whether a guarantor loan could be something to consider.
A guarantor loan is when another person – the ‘guarantor’ – agrees to make your repayments if you’re unable to. You will still be primarily responsible for making your repayments on time and in full each month, but your guarantor, usually a family member or trusted friend, will step in if you encounter an unexpected change in your financial situation.
While you may wish to do some further research into guarantor loans, it’s helpful to understand that you don’t necessarily need a guarantor to apply for a loan, even if you have bad credit.
You could search for a bad credit no-guarantor loan with CashLady if you meet our eligibility criteria, displayed further down the page.
Bad credit loans: how much money could I borrow?
With CashLady, you can search for a bad credit short-term loan from £100 to £10,000. Repayment terms are available between 3 and 60 months, depending on the amount of money you apply to borrow.
Again, please be aware that CashLady does not work with any lenders of payday loans. Instead, the lenders on our panel offer bad credit payday loan alternatives in the form of short-term bad credit loans.
Bad credit loan direct lenders vs using a credit broker
‘Is it better to use a direct lender or a credit broker?’ is a frequently asked question.
There is no right or wrong answer; it’s entirely down to personal preference.
It’s worth noting that using a credit broker could help to protect your credit file from multiple hard searches. This is because when you apply for a loan with a direct lender, they’ll carry out a creditworthiness assessment, which could include a hard search. A hard search will leave a mark on your credit file, and multiple hard searches in a short period of time will damage your credit score.
Let’s say you apply for a bad credit loan with a direct lender, but your application is declined. You might make another application with a different direct lender, who also turns you down. This cycle could continue until you find a lender willing to consider you, at the cost of racking up many hard searches along the way and risking damage to your credit score.
A credit broker has access to a panel of lenders and can help you find the one most likely to consider your application. This could mean that, rather than shopping around and not really knowing whether the direct lender is right for you, you could apply with a lender who has indicated that you could be a good match for their product.**
**Please note that being matched with a lender through a credit broking service does not guarantee acceptance.
Search for a short-term bad credit loan with CashLady
Are you looking for an alternative to a payday loan for bad credit?
If you meet the eligibility criteria set out below, you’re welcome to use CashLady to help you search for a short-term bad credit loan.
You must:
- Be over the age of 18;
- Be a UK resident;
- Have a UK bank account with a valid debit card; and
- Have a regular source of income paid into your bank account.
Search for a bad credit short-term loan with CashLady: how it works
The CashLady short-term bad credit loan journey is broken down into four simple steps.
1. Fill out our online form. It’s straightforward and can be completed in around five minutes – you’ll just need to let us know some basic information, how much money you need to borrow, and how long you’d like to borrow it for.
Things to be aware of: you should never apply to borrow more money than you need or can afford to repay.
2. We’ll run a soft search on your financial history and scan our panel of lenders for a suitable loan for you.
Good to know: a soft search will not impact your credit score and will only be visible on your credit file to you and the company that carried out the search.
3. If you’ve been matched with a lender, you’ll be redirected to their website. If you’d like to go ahead and make a full application for the loan, the lender will carry out a creditworthiness assessment. This will include a hard search or Open Banking.
Things to be aware of: a hard search will be visible on your credit file for up to 12 months. Multiple hard searches in a short space of time will harm your credit score.
4. If the lender is happy with the outcome of their creditworthiness assessment, you’ll be formally offered the loan.
Good to know: at some point during your application with the lender, you will be sent a loan agreement, which will detail your repayment schedule and the terms and conditions of the loan.
How soon could I get a bad credit loan?
Every lender will have their own timescale when it comes to sending funds. Some may send your money within minutes of your application being accepted, while others may pay out on a certain day of the week.
Some of the lenders on the CashLady panel could send your loan on the same day your application is approved.
Please be aware that the time it takes for the money to show as available in your account will depend on your bank’s policies and procedures.
What to do if you can’t afford your loan repayments
If your situation changes during the term of your bad credit loan and you can no longer afford to make your repayments, you should contact your lender. It’s best to do this as soon as you feel you might make a late repayment or miss one altogether.
Your lender will appreciate you reaching out and will be able to work with you to put a suitable plan in place.
If you need advice on money or debt, please contact one of the following organisations for free support: StepChange, MoneyHelper, Citizens Advice, and National Debtline.
