The difference between emergency loans and payday loans
Many people see emergency loans and payday loans as the same thing, but we look at them very differently. We do not offer payday loans, which are typically very short-term and come with high interest rates attached. A payday loan is usually for a few hundred pounds and is taken out over a period of a few months. It is designed to see you through until you receive the next chunk of your salary.
By contrast, our loans start from £1,000 and the minimum repayment period is one year. Not only that, but our interest rates are typically much lower than those on a payday loan.
If you’re considering alternatives sources of credit, our 118 118 Money Simple Interest Rate Credit Card may be an alternative which can provide you access to finances to cover your short term spending.
You could use our eligibility checker to see if you’re likely to be accepted or not too, remember this doesn’t impact your credit score.
Credit cards vs emergency loans
When deciding between financial products of any kind, it’s important that you understand the key differences in terms of their features and how they work. Of course, everyone’s circumstances are unique and what’s right for one person may not necessarily be right for another. Make sure you do your own research when weighing up the pros and cons. But to give you a general overview, here’s a few differences as examples to help you work out whether a credit card or an emergency cash loan might be best for you:
|
|
Credit Cards
|
Emergency Loans
|
|
Representative APR
|
Usually lower than some emergency loans
|
Usually higher than credit cards
|
|
Repayments
|
Balance to be repaid in full, or a minimum monthly instalment or any amount in between
|
Money to be repaid in fixed monthly instalments, possibly with the option of increasing those amounts to repay early
|
|
Credit Limit/Amount
|
Used as a continuous line of credit, within the credit limit
|
Agreement comes to an end once the loan plus interest has been repaid in full
|
You may also be considering whether a credit card can be an alternative to an emergency loan. Yes, if you think a different repayment style better fits your personal circumstances. If you require access to credit for a very short period of time, the features of a credit card mean if you repay it all within a certain period, then there may not be any interest applied on your balance.
A credit card however may not be a feasible alternative if you wish to have fixed term payments over a certain period. Perhaps you require someone to act as a guarantor for you; credit cards don’t usually offer this feature.
So it depends on your own circumstances whether you consider a credit card as an alternative to emergency loans and you should always do your own research into your options.
Emergency loans for bad credit
This is often what people search for if they think or know they have a less-than-perfect credit history. People are often left under the impression that high interest loans such as a payday loan, or short term loans are the only option available to them in these circumstances. This is not always the case though. Yes, your own credit history plays a part in whether you’re accepted for a card or a loan. However there are lenders, including 118 118 Money who could still consider your application even if you have ‘bad credit’. 118 118 Money offer an eligibility check option if applying for our card, this doesn’t impact your credit score but if you complete a full application, we are required to complete a credit search which leaves a mark on your credit file.
Am I eligible for the 118 118 Money Simple Interest Rate Credit Card?
You can check your eligibility for our credit card before you apply. It’s a simple tool that takes just a few moments to use, and it won’t have any effect on your credit score. To qualify, you’ll need to:
- Be a UK resident
- Be aged between 18 and 70
- Earn at least £8,400 a year
- Not be in arrears with another lender
- Have had no default payments in the past six months
If you’re using our eligibility checker, we’ll also need to know your:
- Name
- Email address
- Date of birth
- Current employment and residential status
- Net monthly income
- Outgoings
- Home address
Will you do a credit check when I apply?
Yes. Whenever you apply for a credit card or an emergency loan in the UK, a credit check will be done. We’ll have a look at your borrowing history, and this will help us to make a decision.
Before you apply, you can always check your credit report. And we recommend using our eligibility checker to find out if you’ll be approved as well as seeing what credit limit we can offer. The eligibility check doesn’t leave a mark on your credit file, a full application does however require a full credit check.
Will applying affect my credit score?
Applying for the 118 118 Money Simple Interest Rate Credit Card or an emergency loan in isolation may not have an impact on your credit score. However, if you make multiple applications in a short space of time, that could have a negative effect on your rating.
If you’re approved for credit and you make your repayments in full and on time each month, it could improve your score. This is because it demonstrates to lenders that you can manage credit responsibly.
How do I get in touch?
Want to know more about our loans or the available alternatives? Please feel free to get in touch with a member of our Customer Services team.
You can call us on 02920 548118*. Lines are open from:
8am – 7pm Monday to Saturday
9am – 5pm Bank holidays
Closed – Sundays
Alternatively, you can use our web or App chat.
Apply for an alternative to an emergency loan
Our credit card could be a more suitable option than seeking emergency money through a loan. Before you apply, use our eligibility checker to find out if you’ll be approved and see what credit limit we can offer. And don’t worry, it won’t affect your credit score, a full application does require a credit search, however.
*02920 548118 is charged as a UK National number.
