Instant cash loans are small loans typically aimed at funding unexpected expenses when you need an instant injection of cash – for instance, when your car breaks down, or medical expenses catch you off guard. Instant cash loans are short-term loans, starting from as little as £100, which you repay in a lump sum on the due date, which is the day after your payday. The maximum amount you can borrow is up to £1,000.

How instantly can you obtain an instant loan?

Instant loans in the UK are same-day loans. The approval procedure of these loans is not the same as that of personal loans. Once you fill in the application, lenders use advanced technology to determine your repayment capacity.

The lending decision is made in minutes, as hard inquiries are not run. Once your application is approved, you will receive funds within a couple of minutes. The entire process takes a couple of hours to completed.

Things to consider while taking out an instant loan

Before applying for an instant loan in the UK, you should consider the following factors:

• Are there any alternatives?

Instant loans are way too expensive. Before using them, consider if you have other alternatives such as credit cards or overdrafts. Compare their costs with instant loans. You might find them a shade less expensive. You can even try borrowing money from your friends and family.

• Can I afford to repay?

This is the most important question to ask. Many people borrow more than they can afford, and then they find it challenging to repay the debt. Missed payments incur additional fees and interest penalties, which significantly increase the amount of debt.

• Is this spending essential?

The next important thing to ask yourself is whether this spending is essential. Can you put it off? If so, do it. In the interim, you stash away money for it, so you do not have to rely on loans to meet your expenses.

• Have you already racked up the debt?

If you already owe too much debt, taking out another instant loan will only add to the burden. You will more likely struggle to keep up with payments. As a result, you might fall into an ongoing cycle of debt. Seek debt advice if you cannot understand the right solution for you.

• Check out whether the lender is legitimate

It is vital to ensure that the lender you have chosen to borrow money from is legitimate and authorised. Various unauthorised lenders provide instant loans in order to make money by charging exorbitant interest rates.

You can check on the FCA Register whether the lender is licensed. Borrowing from an unregistered lender will preclude you from filing a complaint against the unethical lending practices of a lender, even though you fall into debt.

• Check your affordability

Another thing to consider before using instant loans is your affordability. Do not take out instant loans if you are not certain about your repayment capacity. These loans are very expensive. They are repaid in full on the due date. If you miss the payment, you will have to roll it over. As a result, the debt amount will rapidly soar.

What are the types of instant loans?

All short-term personal loans are called instant loans. They have got this name as money is disbursed on the same day you put in your loan application form. Here are the types of instant loans:

• Payday loans

Payday loans are small loans aimed at helping you tide you over during financial emergencies. The amount you can borrow through payday loans is between £1,00 and £1,000. Here are the features of payday loans:

•       Payday loans are small loans aimed at helping you tide you over during financial emergencies. The amount you can borrow through payday loans is between £1,00 and £1,000. Here are the features of payday loans:

Payday loans charge high interest rates. The APR of these loans can go up to 500% and more.

• These loans are paid back in full on the next payday. The maximum repayment period cannot be more than a month.
• Soft check is made, so you do not have to lose your credit points.
• Payday loans do not help with credit building, even though you settle the account on time.

It is worth noting that payday loans will throw you into an abyss of debt if you fail to discharge them in full once and for all.

• Cash advance

A cash advance refers to a cash loan that you take out against your credit card limit. Cash advance does not offer you a grace period, which means interest is charged from the first day of withdrawal. They charge very high interest rates and fees. You should use this option only when you are certain about your repayment capacity.

• Very bad credit loans

Extremely bad credit loans in the UK are also a type of instant loan. They run a soft check, so there is no fear of losing your credit points. These loans are also very expensive. You should carefully analyse your repayment capacity.

The maximum amount you can borrow with these loans is just up to £500. At the time of using these loans, make sure that you will not struggle to keep up with debt payments.

What are the upsides and downsides of instant loans?

Here are the advantages and drawbacks of instant loans in the UK:

How much will instant loans cost you?

Instant loans are expensive. While payday loans are capped at 0.8% per day, other types of instant loans are not. They might be even more expensive. Additionally, you will have to pay fees which cost about £15. You should carefully check interest rates and fees before using these loans.

The bottom line

Instant loans can be taken out from any lender despite a subprime credit rating, but these loans are exorbitant. You should beware of loan sharks and make sure that you do not borrow more than you can afford.

If you are not certain about your repayment capacity, you should consider other alternatives, such as borrowing from friends and family. They will not charge interest. However, you must pay back the money on time.