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Small loan alternatives

  • You could consider a credit card instead
  • Guaranteed credit limit
  • Check your eligibility with no impact to your credit score
Check my eligibility This won't affect your credit score

Representative example: Amount of credit £1,200. Interest rate: 49.0% pa (variable) Representative 49.0% APR (variable)

What is a small loan?

If you're looking to borrow funds and don’t necessarily need to take out a large sum of money to be repaid over a long period of time, a smaller loan amount repaid back over a quicker period may be an alternative.

Small loans are typically for low amounts – for example in the hundreds of pounds – but they work the same way as any other loan in that you repay the money over a set period via monthly instalments with interest attached.

At 118 118 Money, we do things slightly differently and can offer loans of £1,000 to £5,000 over one to three years to help you deal with any cash flow problems or allow you to cover any sudden, unexpected costs.

If a ‘small loan’ isn’t necessarily what fits your circumstances, you could consider a 118 118 Money Simple Rate Interest Credit Card as an alternative. 

But as with any financial product, it’s important that you do your own research and weigh up all your options before you make a commitment.

Apply for a credit card from 118 118 Money with confidence
Use our eligibility check to find out what credit limit we’ll offer you before you apply, without affecting your credit rating!
Check my eligibility This won't affect your credit score
Why use a credit card as an alternative to a small loan?

A credit card could prove to be a more suitable option for you than a small cash loan. Here are just some of the benefits:

A credit limit of up to £1,200.

Flexibility to repay in full or via instalments, as long as you make the minimum repayment. It’s always recommended that you pay off more than the minimum if you can afford it.

Up to 51 days interest-free on purchases when you repay your full balance each month.

You can check your eligibility without affecting your your credit score.


As with our personal loans, you can apply for the 118 118 Money Credit Card online.


Want to apply for a credit card?

  • Alternative to a payday loan
  • Check your eligibility with no impact on your credit score

Are there alternatives to small loans?

A small loan, a payday loan, a short-term loan. These terms are all used interchangeably when considering small loans. Remember, small loans are typically for a small amount, and you may find many traditional lenders don’t offer loans for very small amounts like £100 or £200. Because of the small amount, these loans can often be targeted at those with a bad credit history, and those with a less than perfect credit score can often feel payday loans are the only option. Small loans are used in very close association with short-term or payday loans. 118 118 Money are neither, but we will still consider your application even if you may have bad credit.

So yes, there are alternatives available to a small loan, but the extent to which they are considered an alternative is dependent on your own circumstances. A credit card can be one alternative. The way in which they are designed means you could utilise credit to the amount you need and repay within a certain period. Repaying the balance in full could ensure you aren’t paying interest on the balance. If you only make the minimum repayment, then interest will be applied to the balance.

What are the differences between a small personal loan and a credit card?

If you’re weighing up whether to apply for a small loan or a credit card, it’s important that you’re aware of how they work and their main differences. To help you, we’ve put together this summary table:


Credit Cards

Small Loans

Representative APR

Typically lower than small or no guarantor loans (but dependent on your circumstances)

Can typically be higher than credit cards


You can choose to repay the balance in full, make a minimum monthly repayment or anything in between

You will repay in fixed monthly instalments, although it may be possible to increase the amount and repay early if you can afford to

Term of the agreement

Can be used as a continuous line of credit, as long as it’s within the agreed limit

The loan agreement finishes once you have repaid the loan amount plus interest in full


How do I know if I’m eligible for a 118 118 Money Simple Interest Rate Credit Card?

Not sure if a small short-term loan is right for you? If you think a credit card might be a better option, you can check your eligibility before you apply. Our simple tool will let you know if you’re likely to be approved as well as the credit limit we can offer. And it does all that without any impact on your credit rating. To apply for the 118 118 Money Simple Interest Rate Credit Card 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

Whilst using our eligibility checker, you’ll  also need you to provide us with some basic information, such as:

  • Name
  • Email address
  • Date of birth
  • Current employment and residential status
  • Net monthly income
  • Outgoings
  • Home address

Will applying have an impact on my credit score?

Whether you’re trying to get a small loan or a credit card, you should know that several applications in a short space of time can have a negative effect on your credit score. Before you apply, you can use our eligibility checker. This will tell you if you’re likely to be approved and it won’t have any impact on your rating.

It’s also important to remember that repaying your card balance or making the instalments on your small loan on time and in full every month can improve your rating. This is because it proves to lenders that you’re a responsible borrower.

Can a loan or credit card improve my credit?

If you repay your loan or credit card balance back within the time periods as agreed with your lender, this can help to improve your credit score. Of course should you miss or make late repayments this can have a negative impact on your credit rating.

If you’re looking to improve your credit, you could get an understanding of what your credit profile looks like by accessing the information at credit reference agencies. There are other ways which can also help you improve your credit. A credit builder credit card may be one option, for instance.

Will 118 118 Money do a credit check when I apply?

Yes. Whether you apply for a small loan or a credit card, we’ll do a full credit check. This means we look at your borrowing history, which helps us to decide whether we can say yes to your application.

You can check your credit report before you apply and don’t forget that using our eligibility tool doesn’t have any impact on your score.

How do I get in touch if I have a question?

If you want to know more about small loans or whether a credit card might be a more suitable option for you, please don’t hesitate to get in touch with our Customer Services team.

You can give them a call on 02920 548 118 – lines are open from:

8am – 7pm Monday to Saturday
9am – 5pm Bank holidays
Closed – Sundays

Apply for a small loan alternative from 118 118 Money

Want to apply for a credit card with 118 118 Money? You can try our eligibility check first to see if you’ll be accepted before you apply – and it won’t affect your credit rating.

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Small Loans Alternative FAQs

If you decide a loan is the right option for you, you can apply online with 118 118 Money. We only offer loans of between £1,000 and £5,000 with repayment terms between 12 and 36 months (missed or late repayments will incur a £12 charge).

Small loans can be used to cover an emergency or an unforeseen financial situation where a more significant amount of money isn’t necessary. Some examples include:  

The interest rates on our personal loans range between 49.9% and 79.9%. In comparison, the APR on our credit cards is 49.0%, which is one of the reasons why they might prove to be a better option for you.

Representative example: Amount of credit: £2,000 for 24 months. Interest rate: 41.2% pa (fixed). 24 scheduled monthly payments of £123.64. Total amount payable: £2,967.43. Representative 49.9% APR.

We expect more than half of our loan customers to get our representative 49.9% APR, but that will always depend on your individual circumstances. Some small loan companies offer variable rates, which means your instalments can vary from one month to the next. But the rates on our loans are fixed, so you’ll always know exactly how much you’re repaying each month, and overall.

When you apply, we’ll look at more than just your score. We can never guarantee your approval before we have all the information we need, but it may still be possible for you to be accepted for a loan for bad credit or a credit card for bad credit. We treat every application on its own merits, and we want to help as many people as we can get the product that is suitable for them.

We’ll make our decision based on your credit score and other publicly available information, such as any CCJs against your name and your place on the electoral register. If your application is declined and then your situation improves and you wish to re-apply, we welcome you to do so after 180 days.

If you apply for a credit card instead of a small loan and you are approved, your card and PIN will arrive in the post – separately – within 10 days.

The Money Advice Service has more information on the options available to you here. This includes details of things such as asking for a pay advance, using your authorised bank account overdraft and borrowing from a credit union as well as other suggestions. Ultimately it depends on different factors as to whether you consider one as an alternative to another. For example, dependent on affordability and your own circumstances, you may find a personal loan or a credit card is a better alternative to payday lending.


Ready to apply for a credit card from 118 118 Money?

You can try our eligibility check first to see if you’ll be accepted before you apply – and it won’t affect your credit rating.