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Text Loan: How It Works

Text Loans UK
Borrow £50 – £5,000
Loan type Short Term
Approval Rate 99%
Interest Rate 292% PA

Unforeseen expenses and other financial emergencies are realities of life, especially in a world where most everything you need, you have to pay for. In our day-to-day living, we’ve all experienced a time when we badly needed to pay for something but were short on cash, and to make things more dismal, payday was still a few days away. It’s definitely not one of the best feelings in the world.

For those with very limited financial resources but need money right away, taking advantage of short-term loans text could afford them immediate solutions. Short-term benefit approved loans such as a text loans are convenient for borrowers who need quick cash. However, a word of caution this early: Only take the loan if you can pay the principal amount and all applicable fees on time. Missed or late payments can incur large penalties and might aggravate your situation.

How Text Loan Works

A text loan is generally called such because of how one is supposed to apply for it—sending a text message through mobile phone to a lender. But technically, it’s a quick loan with bad credit with a high interest.

A common misconception about text loans is that it is instant loan. While a borrower usually only needs to text a lender to borrow money and although money will be credit immediately after the application is complete, the entire process is not that quick and simple.

The lender still has to perform a credit and affordability check on the borrower. This is mandatory according to Financial Conduct Authority (FCA) regulations. Once you’re cleared and it’s a go for you, money will be deposited to your pre-set bank account.

How to Apply for a Text Loan

Usually, a lender will only offer a loan to an existing customer who already paid off a previous loan and has established good payment history, as a way of making loan reapplication more convenient for the customer.

If your lender offers this option to you, normally you will only need to text a code and the amount you want to borrow, and they can use your information on file to assess your application process to get a no guarantor loan However, to ensure that your details are still correct, the lender will have to perform another credit check before approving the loan application process, as mandated by the FCA.

text loans

Text loans are typically not offered to new borrowers since all the information required for a new application cannot possibly be contained in a text message, unless the lender requires you to make an initial online application. In this case, you will need to fill in and submit an online application form to the lender. Thereafter, the lender will send you a PIN in 30 minutes, which you will then input in the lender’s website. The process is essentially not loan per se but simply a means of verification.

How Much Can Be Borrowed from a Text Loan

The amount that can be borrowed from a text-loan depends entirely on the lender. Some direct lenders might offer quick payday loans only up to a hundred pounds while others might be willing to lend larger amounts, even up to a couple thousand pounds.

However, do note that this is only the principal amount. The total amount you will owe the lender will be bigger, which will include all the different fees that come with applying for a direct lender loan.

Text Loan Regulation

For all types of loans, not just text loans, direct lenders are required by the FCA to carry out a credit check. This is a mandatory procedure. A credit check is important because it is the responsibility of the lender to ensure that the borrower has the means to pay the loaned amount, including fees, within the agreed period.

Any lender who does not carry out a credit check is conducting illegal business. Stay away from direct lenders advertising no-credit-check loan applications, and always check if the lender is regulated by the FCA.

As a regulatory body, the FCA is tasked to regulate financial firms in the UK and the services they offer to consumers, such as loans. Through the FCA, financial companies will be required to secure vital customer information and ensure that consumers’ interest are protected.

How Does Payday Loans Compare?
Bad Credit Loans Why Use Us?
How much can new customers borrow?Up to £5,000No fees, ever
What are the repayment terms?3 – 24+ MonthsNo paperwork
Representative APR292% pa (variable)No obligation quote
Can I apply with bad credit?YesInstant decision
Do we credit check?*NoNo credit footprint
Can I repay in instalmentsYesFlexible repayment
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Advantages and Disadvantages of Text Loan

This type of loan is one of the most convenient ways to get out of a temporary financial crisis, such as during emergencies or when you have unexpected expenses. It is processed faster than most other loans, and you might even be able to get a bigger loan amount, depending on your lender. 

However, if you are planning on getting this short-term loan, do not forget that on top of the principal amount, you will also be paying for the interest, which is quite high. If you know how to handle your money and have the resources to pay off your debt, this will not be an issue. But some who take the loan and are unable to pay their dues on time might face serious financial issues, with interests, penalties, and other fees piling up.

Defaulted Text Loan

While many borrowers are able to pay their loans promptly, many also end up defaulting their loan payments. What happens when you default a loan?

When your payment is due and you don’t have the money ready, the lender will try a few more times to collect it from you. If you set up your payment through your bank account, prepare for the insufficient funds charges, which will certainly worsen your predicament.

The lender may try calling you for payments, and if they don’t get anything for around 60 days, they will turn over your information to a collection agency. Once this happens, this will reflect on your credit report and will negatively affect your credit score.


While it’s still best to stay away from debts, there are unforeseen circumstances that might lead us to resort to loans, such as during emergencies. Getting a text loan for quick cash is one of the fastest ways to remedy this. However, always remember that loans are not favours and they come with a price. 

So before taking a text loan, or any kind of loan for that matter, think things through very well and consider your financial capabilities to avoid making your situation worse than when you started. Always have in mind that late repayment can cause bad impact on credit history.

Text Loan FAQs

  1. What is a text loan?

    A text loan is a short-term loan with high interest. It’s called such because qualified borrowers would only need to text the lender to apply for a loan.

    It is not instant loan, as the borrower still has to undergo credit check by the lender before his or her loan application can be processed, as mandated by the FCA.

  2. Who can apply for a text loan?

    Usually, a lender can offer a text loan to an existing customer with no outstanding loans and with good payment history. This way, reapplying for a loan will be more convenient for the customer.

    New borrowers are generally not eligible for this loan type, although text messaging might be used by the lender to further verify a borrower with an online loan application.

  3. How much can I get from a text-loan?

    The amount you can get from this loan type is ultimately depends on the lender. It can be as low as a hundred pounds to as much as a few thousand pounds.

  4. What is the role of the FCA?

    The Financial Conduct Authority (FCA) is tasked to regulate all financial institutions offering loans, such as text loans. It ensures that financial firms will conduct a credit check to see if the borrower has the capacity to repay the loan. In this way, the borrower is protected from further financial issues if it is found out he or she doesn’t have the means to pay for the loan. The FCA also ensures that vital client information are protected.

  5. Are text loans always approved?

    No. There are instances when a loan application will be disapproved, especially if the borrower doesn’t meet the lender’s set requirements.

  6. What happens if I fail to pay my loan?

    This is something you should avoid. Defaulting on your text loan is a terrible idea as it will only lead to compounded fees and penalties and, worse, a bad credit standing.