£100 Loans for Bad Credit
Updated: April 16, 2024 Author: Paul Gillooly
Key takeaway. £100 loans for bad credit are not as widely advertised as larger sums are, but they can be secured – in a variety of ways too. Payday loans, fast loans, credit unions, and doorstep lenders all offer loans of this amount but the interest is often higher than normal because of poor credit history. Credit checks are carried and approval isn’t guaranteed. A better option could be to ask your employer for an advance, borrow from friends, family, or colleagues, or pawn possessions as security for the loan.
Having a necessary expenditure when there’s a gap in your cash flow can put you in dire need of an amount as small as £100. However, £100 loans are not that easy to secure as lenders prefer approving bigger loans since they bring them bigger profits.
It doesn’t make much sense to take on a £1,500 debt when you only need £100, especially when your financial situation isn’t at its best. The way forward is to explore your options and which ones are suitable to you.
Small £100 loans for bad credit
Payday Loans
This is a short-term, unsecured small loan designed to tide you by in a financial emergency. They are called payday loans because the idea is for you to pay the loan when you get your next paycheck. Some lenders might agree to stagger the repayments for a slightly longer period though.
Payday loans are relatively easy to obtain. You can apply to an online lender and get approval within 24 hours, sometimes sooner. Before they approve your request, you must pass their affordability requirements and provide information like a valid home address, bank details, employment history, etc. They’ll also run a credit check, as mandated by the Financial Conduct Authority (FCA), but your credit rating is not weighed heavily in their final decision. Some lenders do a soft check instead of a hard check, which wouldn’t affect your credit rating.
Additionally, payday loans come with very high-interest rates (up to 0.8% per day, which equals £24 on a £100 loan), so you might want to look around for the best rates. Check that a lender is approved by the FCA before applying. Understand the loan terms and exactly how much you’ll pay back before agreeing to the loan. When you’re in a rush, these can get you money fast, however, they can worsen your financial situation if you become financially dependent on them.
Quick loans
Quick loans are similar to payday loans because they are also ideal for emergencies. With a quick loan, you’ll get a decision quickly – sometimes in as little as 15 minutes, even though approval isn’t guaranteed. You also have more leeway to spread the loan repayment over a longer period of time.
When you apply for a quick £100 loan, the lender will run a credit check against your files. So if you have a CCJ or an active bankruptcy, they may instantly reject your application. However, a bad check doesn’t disqualify your application. If you pass their affordability assessment, you have a chance of getting your loan approved.
It is important to understand the lender’s terms and conditions before you put pen to paper. Quick loans have interest rates upwards of 39.9%, so be sure you can make the repayments. Also, confirm that the lender will do a soft credit check so that your credit history won’t be impacted. Soft checks are eligible checkers. If it shows you’re likely to be rejected, you’ll know to look elsewhere.
Doorstep lenders
Doorstep lenders operate in a face-to-face manner. The application could be online or via a phone call, but an agent would pay you a visit to discuss the application, loan terms, and repayment plans. This is part of their affordability assessment as they prefer to know you in person before making a decision.
Doorstep lenders are usually lenient towards those with bad credit, a CCJ or an active bankruptcy but they will need to run a credit check before they approve or reject an application.
If your application is approved, you can decide to have the fund in cash or in your bank account. The repayments are usually on a weekly basis but the interest rate, depending on the lender, could be as high as 200% or even 1,500%. Very few doorstep lenders are operating these days following the collapse of Provident, the Morses Club, and Loans At Home. Those operated nationally. Few are left.
Credit Unions
Credit unions are co-operative institutions owned and run by their members. They also offer loans as small as £100 and unlike banks and most credit institutions, they don’t concentrate on maximising profit. Instead, they focus on delivering quality financial services to their members. That’s why they are often the best option for borrowers with bad credit.
To qualify for a credit union loan, you need to be a member first. Each union has varying requirements, which include a mandatory credit check. It’s always wise to ring them up and ask about acceptable credit rating for new members as well as other requirements before applying.
Credit unions always offer lower rates because they are member-owned cooperatives. They don’t have shareholders on their board. They’re also more lenient than payday and fast loan lenders. Decisions can take from a few days to a couple of weeks – depending on the time of year. Close to the festive season will be their busiest when all members are withdrawing savings and applying for loans to cover the period.
Salary advance schemes
Salary advance schemes are also known as Employer Salary Advance Scheme (ESAS), Flexible Pay, or On-Demand Pay. They allow employees to get a portion of their future salaries earlier than it is due.
If your employer is signed up to a salary advance scheme, you can ask them for a £100 advance on your next pay. The application process varies across employers but you may be required to pay a small fee.
A salary advance won’t affect your credit history. You’re merely taking from a portion of your future earnings so your employer won’t run a check against your credit. However, it’s important to read and understand the terms and conditions before you apply. These schemes are not regulated, but the FCA has issued a statement in relation to this type of finance.
Depending on your situation, salary advances can be a cheaper option than taking a loan or a bank draft. But you should only use them for necessary expenses as the advance will be deducted from your next pay.
Government budgeting loans
If you have been on certain government benefits for the last six months, you may qualify for budgeting loans. They are provided by the UK government, and you only have to pay back how much you owe, with repayments automatically taken from your benefits.
Application is usually done online via the Gov.uk website and decisions can be sent via text messages, phone calls or letters. To be eligible, you have to have been on income support, income-based jobseeker’s allowance, income-related employment and support allowance, or pension credit.
You won’t be eligible for this loan if you’ve been on Universal Credit benefits, have been involved in an industrial action, or owe more than £1,500 in crisis loans or budgeting loans. Approval isn’t guaranteed and the final decision, if you apply online, can take up to 7 days.
Will £100 loans affect my credit score?
This depends on the lender. Credit institutions have to carry out a credit check before they approve your loan, no matter how small it is. However, some lenders only do a soft check, instead of a hard one, which won’t leave any mark on your score. Frequent hard checks on an already bad credit would make it worse.
Other ways to get finance for £100
Many people don’t think about this when they’re in financial constraints, but do consider asking your circle of friends, family, or colleagues if they would consider lending you £100. Many will if it’s an amount they can spare. If they do, let them know when you’ll repay it – as a lump sum from your pay, or weekly or monthly in installments. Then keep to whatever agreed repayment schedule to avoid money issues wreaking havoc on valued friendships.
Another option is to sell unimportant items, or if you can do without something of value for the term of a loan, use it as a security for a pawnbroker loan.