Do you have to get cash fast online in order to get out of a tricky spot? Well, you may have noticed that there are lots of lenders offering more or less the same thing.
Drafty Loans claims to stand out from the competition and offer you something better. But does it really?
In this comprehensive review of the lender, we take a look at everything that makes it tick. Before you sign up for a loan with them, take a moment to find out all you can about the platform and make an informed decision.
What is Drafty Loans?
Drafty Loans is a direct lending company that was formed by a group of finance professionals. They felt that the needs of a majority of people were ignored when they fell into financial need and had to borrow from traditional lenders.
They seek to address these needs and in the process, seek to differentiate themselves from the competition.
Drafty is a trading name of GAIN Credit LLC and a trading arm of Lending Stream LLC, which is one of the best payday loans service provider in the US. In the UK, it is a regulated entity operating under the Financial Conduct Authority.
The company was launched in 2015 and markets itself as a flexible and innovative alternative to short-term loans and unarranged overdrafts.
Pros and Cons of a Drafty Loans Loan
How does a Drafty Loans loan work?
As mentioned, Drafty Loans seeks to address borrowers’ pain points by tailoring their product to user needs. With this in mind, it does not offer a payday loan or overdraft loans but focuses on lines of credit.
It compares this to a pot of cash into which you can dip as many times as you need, and save money in the long run. To illustrate its uniqueness, it explains the concepts behind these popular types of loans.
Payday loans are essentially short-term, high interest loans that you typically repay in a month. Drafty’s line of credit claims to be much cheaper. At the same time, it emphasizes the fact that you do not have to apply again to borrow again. More of that in a little bit.
An overdraft, on the other hand, is a financing option that lets you access more than you have from your bank account. It claims to offer lower rates than overdrafts as well. And it also highlights that it is not connected to your bank account.
As a line of credit, Drafty requires that you apply only once and get access to a perpetual loan ranging from £200 to £3,000. Unlike traditional loan options, you do not get it as a lump sum and then pay it off gradually. Rather, after you qualify for a line of credit and open it, you can access it again and again.
Loan qualification terms
There are only two conditions. First, you have to operate within the limits of the line of credit and cannot exceed it. Second, you must pay the required minimum on a monthly basis. Any time you dip into the pot of cash, they send it to your account in approximately 90 seconds.
And best of all, there are no fees applicable for accessing the service. Rather, it has a representative APR on 89.7% and a maximum APR of 91.2%. There is no limit on the period of time for which you can borrow the loan.
Considering that there are no prepayment fees, you have the option of repaying your loan early so as to save on interests. Another advantage is that you can pay back any amount that your budget allows, at your own pace, for as long as it is equal to or higher than the required minimum.
In order to determine the amount for which you qualify, the platform makes use of a sophisticated method for credit scoring. The lender will also analyze your affordability so as to determine whether or not you can make repayments sustainably.
And as a responsible lender, they also ensure that you can make repayments comfortably. Notably, you do not have to have a perfect credit score to qualify as they take multiple factors into consideration in addition to the score.
If your application gets approved and you exercise good repayment habits, you can qualify for an increase to your credit limit if necessary. For first time applicants, once you complete the application process and get approved, you should be able to get the loan within an hour.
Flexibility is the most outstanding aspect of this type of loan as you only need to borrow the amount you need, when you need it. Unless you close it, it is always accessible and you can set repayments that suit you.
But in there lies its key downside – this type of loan can keep you in debt perpetually. You might also be tempted to borrow when you don’t really need to, simply because you can.
Interest rate and repayment
Your outstanding loan amount will be subject to a daily interest, which is yet another advantage. It means that you only need to pay interest on funds in your possession, which would not be the case with a monthly interest rate.
But as always, late payments are discouraged. Even though there are no penalties for them, it will mean having to pay a higher interest for the extra days. Additionally, poor repayment habits will inevitably damage your credit score.
Also, since the lender will review your performance, you might not qualify for higher limits if you have a habit of making late payments.
As a responsible lender, the provider runs hard credit checks on all applicants in its affordability analysis. Fortunately though, you will not be subjected to any further hard credit checks after that for as long as the account remains open.
They will, however, continuously monitor your credit rating without impacting your score. Thus, if your financial situation changes significantly, they will know about it.
For repayments, the lender makes use of a continuous payment authority (CPA) to collect the agreed upon amount directly from your bank account.
Drafty Loans Account Creation and Borrowing Process
Creating an account and borrowing from Drafty is simple and straight forward.
1. To get started, you might want to try the fastcheck on the home page (https://www.drafty.co.uk/) to check if you will get approved.
Under this section, select the loan limit you want to access and then provide additional details. These include your full name, date of birth and email address.
2. You will also need to enter your residential details including the postcode, house number, time at residence and type of occupancy.
3. The last set of details you need to supply covers your employment, income and expenses information.
Choose your employment status from the listed options and your monthly income amount and expenses.
Following this process will ensure that your credit does not suffer from a hard check and you fail to get approval.
5. After the fastcheck, you can now proceed to the actual application process.
You will not need to resubmit the details you have already entered.
You might, however, need to verify some of the details. If that is the case, you will get a request to submit the required documents via email, fax or phone.
Drafty gives a quick decision and if you get approved, you will immediately have access to your account on the platform and on an app.
They will let you know how much you can borrow. So all you need to do is select the amount you want and you will have it in your account in 90 seconds. Note that for your first withdrawal, you must take a minimum of £50 and afterwards, the minimum amount will go down to £20.
Eligibility Criteria for Drafty Loans Loan
There are a number of criteria you need to meet so as to qualify for a loan from the platform. These are:
- Be at least 18 years of age
- Be a UK resident
- Be in current employment
- Earn a minimum income of £750 per month
- Have a UK bank account with a valid debit card
- Have a working UK phone number
Information Borrowers Need to Provide to Get Drafty Loans Loan
During the application process, you will need to provide some mandatory details. These include:
- Your employment details
- Personal information
- Residential details
- Income details
- Monthly expense details
- Email address and phone number
- Bank account information
What are Drafty Loans loan borrowing costs?
Drafty offers competitive borrowing costs. Take a look
- Representative APR – 89.7% APR
- Maximum APR – 91.2%
- Application fees – nil
- Late payment fees – nil
- Prepayment fees – nil
Drafty Loans Customer Support
Drafty Loans has great reviews on various online platforms from previous and existing customers. Most of these hail its customer service, terming it as first class.
Is it safe to borrow from Drafty Loans?
Drafty Loans is an authorized and regulated lender under the Financial Conduct Authority (FCA). Additionally, it is a direct lender and does not share your details with any third parties.
It has a high rating on Trustpilot with 85% of customers giving it an excellent score. The website has high standard security systems in place to secure user data.
All in all, there seem to be no safety concerns. But as with any online site, there is always a risk of malicious activity and data breaches. Take necessary caution to keep your data secure
Drafty Loans Review Verdict
The key mission of Drafty Loans was to address borrowers’ pain points by differentiating their service from those of traditional lenders. And in this regard, they have done an excellent job. With a single application, you can qualify for a never-ending stream of cash and only need to pay for what you use when you use it.
Its rates are highly competitive and there are no fees associated with the service. The customer support team is excellent and the platform has high rating on online platforms.
Though they have to perform a hard credit check which impacts your score, they only do it once as you do not need to reapply. Furthermore, you can check your chances of approval using their fast check option which does not require a hard credit check.
Overall, it is a great platform for short-term financial solutions.[in-content-heros category=”uk-payday-loan”]
Glossary of loaning Terms
A credit score shows your creditworthiness. It's primarily based on how much money you owe to loan or credit card companies, if you have ever missed payments or if you have ever defaulted on a loan.
Guaranteed Approval is when, no matter how bad, your credit score its, your loan application will not get declined.
A Credit Limit is the highest amont of credit a lender will lend to the borrower.
Collateral is when you put up an item against your loan such as your house or car. These can be repossessed if you miss payments.
A Cash Advance is a short-term loan that has steep interest rates and fees.
Your Credit Rating is how likely you are to fulfill your loan payments and how risky you are as a borrower.
Fixed Interest Rate is when the interest rate of your loan will not change over the period you are paying off you loan.
The Interest is a percentage based on the amount of your loan that you pay back to the lender for using their money
If you default on your loan it means you are unable to keep up with your payments and no longer pay back your loan.
If you miss a payment the lender will charge you for being late, this is known as a late fee.
An Unsecured Personal Loan is when you have a loan based solely on your creditworthliness without using collateral.
A Secured Loan is when you put collateral such as your house or car up against the amount you're borrowing.
This is the Interest Rate used by banks for borrowers with good credit scores.
The Principal amount the borrower owes the lender, not including any interest or fees.
A Variable Rate is when the interest rate of you loan will change with inflation. Sometimes this will lower your interest rate, but other times it will increase.
An Installment Loan is a loan that is paid back bi-weekly or monthly over the period in which the loan is borrowed for.
A Bridge Loan is a short term loand that can last from 2 weeks up to 3 years dependant on lender.
Having an AAA Credit Rating is the highest rating you can have.
A Guarantor co-signs on a loan stating the borrower is able to make the payments, but if they miss any or default the Guarantor will have to pay.
LIBOR is the London Inter-Bank Offered Rate which is the benchmarker for the interest rates in London. It is an average of the estimates interest rates given by different banks based on what they feel would be the best interest rate for future loans.
Home Equity Loans is where you borrow the equity from your property and pay it back with interest and fees over an agreed time period with the lender.
Debt Consolidation is when you take out one loans to pay off all others. This leads to one monthly payment, usually with a lower interest rate.
If you obtain a Student Loan to pay your way through College then you loan is held with the Department for Education U.K.
Financial Aid in the form of grants is funding available to post-secondary education students throughout the United Kingdom and you are not required to pay grant
How does Drafty determine my credit limit?
Drafty Loans analyzes your credit score, monthly income and expenses to determine affordability and set your credit limit.
How will I get cash from my line of credit when I need it?
Once you get approved for the line of credit, you will have access to their smartphone app. You can request for funds through the app or via your account on the online platform.
What differentiates the line of credit from other loan products?
Unlike other loans, you only apply once but get perpetual access to a pot of funds. You can access the funds any time and make flexible repayments as long as they meet the minimum required.
How can I increase my line of credit?
By practicing good repayment habits, you can qualify for as much as £5,000. You will get an alert to that effect via email, text message or through the app.
How can I check my outstanding balance?
Log in to the account on the website to check your balance or do so via the smartphone app.
What loan products does Drafty Loans offer?
Drafty Loans only offers one loan product, the line of credit.
What other store services does Drafty Loans offer?
The lender does not offer any other store services.
What countries are accepted for Drafty Loans loans?
Drafty Loans offers services throughout the UK.