Frequently Asked Questions

This will depend entirely on the terms of your loan and your lender's policies. If this is something you would like to have the option to do, speak to your lender before agreeing to take out a loan to understand what is possible and there are no negative consequences or costs to you.

Missing repayments on a secured loan can put your possessions at risk and have serious consequences. Late payments will also affect your credit score and be marked on your credit file.

If you have trouble making repayments, speak to your lender to see if they can help. Do this early and before failing your repayments. If you are still struggling and need help, you can contact Citizens Advice, Step Change, and Money Helper.

UK lenders and credit providers must make sufficient checks to ensure a loan is affordable. This will often include a credit check at some point during the application process. A credit check will show a lender if you have a lot of outstanding debt and late payments, or if you're potentially experiencing financial difficulties. It's likely other checks will be performed - for example a short term lender may request bank statements to check you have enough coming in to pay for your current bills and make the loan repayments.

Applying for lots of loans or other forms of credit in a short period of time can have negative consequences on your credit rating. However, some lenders will initially offer a “soft credit check” before performing a full credit check and lending money to you. Soft credit checks will be able to predict with some accuracy whether or not you will be accepted for a loan. Soft checks don’t have an impact on your credit score.

You can find more information on credit searches in our guide: hard credit checks vs soft credit checks.

There are some lenders who will lend to people with bad credit. However, it is important that you understand the lender’s acceptance criteria before applying for a short term loan, to prevent your credit score being negatively impacted if you apply and are rejected.

This depends on each individual lender (although there are caps on the amount of interest and fees that can be charged by lenders) and the amount you want to borrow. Interest rates are capped at 0.8% per day, or 80p for every £100 borrowed per day. The most you can pay for a high cost short term loan is capped at 100% of the amount you originally borrowed. So, if you borrowed £200, then the most you’ll ever payback for that same loan is £400 - this includes late payments. You can compare short term loans on MustCompare and use our loan calculator to see how much you'll each month and the total cost.

Responsible lending means that lenders can only lend to you if they are satisfied that you can afford to pay the money back. Lenders are therefore required to make the necessary checks - these include credit checks and affordability checks - to ensure their customers can pay back a loan.

In short, the answer is no. When you make a purchase with a credit card, you are borrowing to make a purchase. That money is then paid back and may be subject to interest charges. With a prepaid card, you are using your own money, not borrowed money. And unlike a debit card, you cannot go overdrawn. To learn more see our article Prepaid card VS Credit card - What's best?