Small Loans

Small Loans – Let’s define ‘small’ before moving on.  This can mean any amount of cash from £50 to £1000 in today’s economy.


There has always been a need for people to borrow small amounts of cash to cover unexpected expenses.  People would resort to borrowing small amounts of money from rich private individuals in the Roman times.  But, as the financial system changed to one of institutions and banks lending to each other, companies, governments and well heeled individuals, the people with no access to this type of finance would either go hungry or get small loans at very high interest rates from early ‘loan sharks’ to survive for a few days or weeks until they got some money to repay the small loans.


small loansOf course, nowadays there are many methods of borrowing small amounts of money through unsecured means, some of the most popular are:


  • Credit Card
  • Agreed Bank Account Overdraft
  • Bank Loan
  • Short Term Payday Loan.


Credit Card


This is a relatively recent method of borrowing to pay for goods and services based on a credit limit for each individual, the card holder can also obtain cash up to a daily limit.



The banks and specialist credit card companies provide individuals and companies that have a good credit record a physical card with an in-built credit limit, e.g. £1500.  They can use the card for shopping, paying bills or getting some cash, as long as they stay within the credit limit.



The interest rate (APR) for this type of borrowing is relatively high and even higher for getting your hands on small amounts of cash.  Credit cards are useful and best used as a ‘charge card’, where the outstanding balance is paid in full every 30-45 days without incurring any interest.  They become very expensive if the card holder pays only a percentage of the outstanding amount on a monthly basis.


Bank Overdraft


These can also be expensive if the overdraft borrowing isn’t cleared in 30-45 days.  They are even more costly if the account holder becomes overdrawn without having an agreed overdraft facility in place.



This type of short term unsecured borrowing is useful for people in stable jobs with a good credit rating.  The interest rates (APRs) vary between the banks and are normally cheaper than credit cards.



Bank Loan


This type of unsecured loan is normally borrowed over 12 to 60 months for amounts between £1000 and £25,000 at reasonable interest rates (APRs) fixed for the term of the loan.



Unfortunately most people needing a small loan payable over a short term can’t access this type of borrowing due to their poor credit history, so normally look for an alternative means of getting their hands on the dosh.  Some consumers don’t like to use the banks to get small loans over a minimum term of 12 months when they can get a short term payday loan payable over days rather than months.


Short Term Payday Loan


These have been available for many years, but mainly through door to door lenders and high street lenders at extremely high interest rates (APRs).  The internet has created a whole new channel, market and competition for these small loans.  The main users are both low income and bad credit customer and individuals who don’t want to have a balance on their credit card, a bank overdraft or committing to a much longer bank loan that would take a lot longer to pay off and obtain due to the long forms that have to be completed.



You can apply for a small loan using to get the best rate and quickest way of getting the cash in your bank account. Make sure the company you use holds a current consumer credit licence.



Short term loans from the UK's top payday lenders.

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