Compare Drafty Bad Credit Loans

Updated: June 11, 2024 Author:

Drafty provides a revolving credit account with credit limits up to £3,000. Interest is 0.19% daily and you only pay it on the exact amount borrowed.

Drafty offers a line of credit as an alternative to bad credit loans. The account is simple to understand and you only pay interest on the amount of money you use. A line of credit can be used over and over again and there’s no need to reapply. There are no fees beyond interest associated with Drafty but their representative APR is high at 96.2%. 

Is Drafty Good For Bad Credit?

Drafty describes itself as a “poor credit loans alternative lender”. If that describes your situation with credit, you’re probably wondering exactly what that means. What Drafty offers is an alternative to bad credit loans, credit cards, and overdrafts through a line of credit. It’s essentially a revolving credit facility; similar to an overdraft and credit card. You get a credit limit, and from that, what you spend reduces your available credit and becomes available again once you repay what you borrowed.

Interestingly, if Drafty declines your application then it’s only recorded as a soft search meaning you will be able to see it on your credit file but other companies won’t. Soft searches don’t impact your credit score.

If you are approved then the search will show on your file and other companies will be able to see this, but not what the outcome of the search was.

What Type of Loans Does Drafty Offer? 

Drafty only offers lines of credit. This works a little differently to a loan in that you have funds available as and when needed without needing to reapply. The simple way of thinking of it is it’s like a pot of cash you can dip into when you need it. After the initial application, the pot will always be there so you can reuse it as much as you want. Don’t need extra money? Then you don’t pay anything for any money you don’t use. 

With interest on a Drafty line of credit you only pay it on what you use. If you pay the money back sooner then you save on interest. However, the representative APR is 96.2% so while a line of credit can work better than a loan for some people, that’s an eye-watering amount of interest you’ll be paying back. On a £2,500 line of credit, you’d pay back £3,246 over 6 months or £3,984 over 12 months.

Compared with other bad credit lenders this APR is typical if you have a low credit score and actually lower than some lenders. 118 118 Money has a representative APR of 49.9% but can go up to 80% on their personal loans, and The One Stop Money Shop has a representative APR of 295.6% on their short-term personal loans. 

By only offering a line of credit, it can help you out if you have bad credit without facing overwhelming choices between different types of loans and credit cards. It can put you a little more in charge of your finances by allowing you to only spend what you need, clear the debt quickly if you wish and ultimately boost your credit score if used wisely. 

The Eligibility Criteria for a Drafty Line of Credit

Drafty’s basic eligibility criteria are as follows:

  • have a debit card linked to a UK bank account (when you need to use the credit, you initiate a money transfer from Drafty to your bank account).
  • have a UK address
  • Aged 18+
  • be in regular employment (full or part-time)
  • Earn a minimum £1,250 net monthly income

If you meet the above criteria, it may be worth applying for a line of credit with Drafty. However, before any lending decisions are made, your current finances and credit history are looked into as well as an affordability check to work out your credit limit. A Drafty line of credit can provide up to £3,000 however based on your ability to repay, and your credit history, you may be offered a lower amount than you apply for. 

What Happens If Customers Experience Financial Hardship?

If you’re struggling to pay back money borrowed, contact Drafty and let them know. It’s always better to work with creditors. Life does not always go to plan and everything from job loss, an increase in bills, an unexpected illness or mental health problems can affect your ability to repay the loan or to be able to make a payment on time.

The sooner you contact Drafty the sooner they can work out a plan with you for repayment. A change in circumstances, whether it be mentally, physically or financially is nothing to be embarrassed about and Drafty has helped hundreds of customers in a variety of situations. It might seem scary when you’re faced with the prospect of not being able to repay debts owed but tackling the problem head-on is always better than burying your head in the sand and hoping the problem goes away. It never does!

If you’re experiencing financial difficulties you can get free, impartial advice from Money Helper which is a government-backed service that can help you get back in control of your money.  

Are There Any Other Fees From Drafty I Need To Know About?

A big draw for using Drafty is that they don’t charge any fees other than interest… No late fees, no transaction fees, and no fees for repaying early. Although missing payments won’t incur a late payment charge, it will impact your credit score. Your account management is shared with credit reference agencies making it handy as an account to improve your credit score, but mismanaged by skipping the minimum payments can have a detrimental effect on your credit score.

The total cost for your line of credit depends on how much you use and how long you take to repay the amount borrowed. Drafty’s line of credit costs 0.19% per day so that’s 19p per day for every £100 you spend. The minimum monthly repayment is 6% of what you’ve borrowed plus the interest. Repaying early or repaying more than the minimum amount can lower the cost of using the service and they don’t penalise for doing that. Always a plus when you don’t get charged for repaying debts early!

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