Instant Loans For Bad Credit

Updated: March 26, 2024 Author:

Key takeaways: Instant loans are a popular choice for those with bad credit as you’re more likely to get approved. They’re a great option for covering emergencies if you can pay them back. However, it’s easy to get trapped in a cycle of debt with an instant loan. 

    What Is An Instant Loan?

    An instant loan is typically a small loan taken out over a short period but it does come with a high interest rate. By far the most popular form of instant loan is a payday loan as it doesn’t require any collateral and the money is available to you the same day. However, you are normally required to repay the loan plus the added fees by your next pay cycle. 

    Some lenders will offer instant loans that can be taken out over a few months instead so you still get the benefit of having instant access to the money but you get slightly longer to pay it off. 

    How Do Instant Loans Work

    Instant loans are approved on the same day an application is submitted. They’re designed to help out with emergencies if you don’t have savings to cover any unexpected costs. When taking out an instant loan you need to remember that lenders will carry out a hard check. That means the instant loan will be visible to anyone who runs a credit check on you. 

    The lower your credit score, the harder it will be to obtain an instant loan. However, some lenders specialise in bad credit instant loans, so you will need to do some research to find the right lender for you. 

    What Are The Advantages Of An Instant Loan?

    Instant loans don’t have a great reputation due to the extremely high-interest rates they come with. However, like anything, there are pros and cons to instant loans even if you have bad credit. You must weigh your options and decide what is right for you.

    Here are four advantages of an instant loan:

    • They’re easy to apply for: Instant loans are one of the easiest types of loans to apply for. Whilst you’re not guaranteed to be approved for the loan, you will have a quick answer and those that are accepted will receive the money the same day.
    • They can cover unexpected emergencies: If you’ve found yourself halfway through the month and suddenly your car has broken down or your boiler isn’t working you might not have enough money to cover these unexpected costs. An instant loan can help pay off unexpected emergencies and tide you over until the next payday when you can repay the loan.
    • The money goes directly into your bank account: An instant loan is approved on the same day and the lender will pay the money directly into your bank account for you to use as you wish. Whether that’s taking cash out an an ATM or paying for something via bank transfer.
    • You can get an instant loan with bad credit: Some lenders specialise in instant loans for people with bad credit. However, lenders offering payday loans are actually a little less interested in your financial history than if you were trying to secure a different type of loan. This is because an instant loan is paid back quickly so lenders are more interested in whether you can pay the loan back in the here and now rather than your financial past.

    Can I Get An Instant Loan With Bad Credit?

    As we’ve discussed you are more likely to get an instant loan with bad credit, especially a payday loan as the repayment term is so short. All lenders are interested in is whether you can repay what you’ve borrowed in your next pay cycle so if you’re financial past doens’t look that great it might not be that much of an issue.

    The borrowing requirements for an instant loan are often less strict than other types of loan which makes them an attractive option for those with bad credit. Many payday lenders will consider lending to those with bad credit even if they don’t meet the loan requirements of high street banks. 

    What Are The Disadvantages Of An Instant Loan?

    Instant loans do have their disadvantages especially because the short repayment term and the high interest rates can cause issues for people. 

    Here are three disadvantages to an instant loan:

    • High interest rates and fees: A huge amount of money will be added to the loan cost in interest rates. Instant loans have some of the highest interest rates around so borrowing a small amount of money can turn into a large amount of money. If you fail to make the repayment then you will incur fees and more interest which can trap you in a cycle of debt.
    • They can affect your credit score: If you fail to repay an instant loan on time your credit score will be negatively impacted. However, an instant loan can negatively affect your credit score even if you repay on time. Some lenders don’t like to see payday loans on a credit check and it could count against you when applying for things like a mortgage. 
    • They can create a cycle of debt: Because payday or instant loans are more likely to be used by those with bad credit and on low incomes they can quite easily trap people in a cycle of debt where they fail to repay their loan and the debt spirals so you take out another loan to cover the first one and so on. 

    Instant Loan Alternatives

    If you think an instant loan might not be right for you there are alternatives to consider that might help you out in an emergency. 

    Trying to acquire a small loan from family and friends could be the best option with no fees involved and nothing showing up on your credit report. If family and friends can’t help out then look at a short-term personal loan could be a better option than a payday loan. A short-term personal loan still comes with high interest rates, especially if you have bad credit, however, it’s still lower than an instant loan and you have longer to pay it off which gives you time to budget better and make the repayments. 

    If you know you can pay off a credit card then using one for an unexpected emergency could be a good idea to tide you over. Just make sure you can pay everything off or you’ll be stuck with credit card debt.