There are several different types of short-term loans and it can be a good idea to know more about them. You might wonder which the best will be, but this is difficult to judge. This is because it will depend on what your personal circumstances are as to whether a certain type of loan will suit you more than others. A few types of loans are described below so that you can get an idea of what they are like and which might suit you in different circumstances.
A payday loan will allow someone will a poor credit rating to be able to borrow money in an emergency. The loans are set up to allow people to borrow few hundred pounds or possibly up to a thousand pounds. Borrowers are not judged on their credit rating but are leant small amounts of money and as they prove they can repay it, they are allowed to borrow more. The loans are also arranged very quickly. It is possible to get money within a few days or even a few hours with some lenders. This means that it is possible to get money extremely quickly even if you cannot get it from other lenders. The urgent loans have to be repaid in one lump sum. This means that you will be free of the debt very quickly. The lender will set up a direct debit so that the money will automatically leave your bank account which means that you will not need to remember when to repay it. You will need to be careful though, to make sure that you have enough money available to repay the loan when you need to. It can be easy to assume that just because the money comes out on payday, that you will have the money available to pay it. However, you need to make sure that you definitely will have enough and that you will have enough to pay for everything else that you will need as well.
Instalment loans differ slightly to payday loans in the way that they are repaid. Rather than being repaid in a lump sum, they will be repaid in instalments over a series of months. These types of loans will be more expensive because you owe the money for longer. The longer you have the loan the more you will pay in interest, you see. However, the fact that you will be repaying smaller amounts each month will mean that you will be able to more easily cover the monthly repayments without struggling to pay for other things. Sometimes, even if we cut down all of our non-essential spending, we will still not have enough money to be able to pay for everything that we need and therefore this is where these loans can offer good value for money. If we used a cheaper payday loan, we risk not being able to repay it or struggling with everything else and this can lead to stress and may even mean that we will need to take out another loan to be able to manage.
Guarantor loans are quite different to the other types of loan. Firstly, you can borrow a lot more money, perhaps up to £10,000 and you will repay over a longer period, years rather than months. However, you still do not need to have a good credit score, despite borrowing so much money because you will have a guarantor to help you. The guarantor will be someone that you nominate who has a good credit record. They will make any of the repayments that you will not be able to afford.
Deciding which of these loans is best, will depend on your specific needs. You will need to think about how much money you want to borrow and how much you can afford to repay and then you will be ale to choose which loan is the best one for you. This is something that you will need to decide at the time of getting a loan as it is no good choosing it beforehand as you will not know what your situation will be. However, it is good to find out a lot about the different types of loans and thinking about which ones will be the most suitable for you. Consider what your immediate needs are and which will suit you the best, using your previous knowledge about how these loans work. Having a reasonable knowledge of these loans will be a good idea and it could even be useful to find out a bit more about some of the lenders. Then you will be able to know which loan might be the best and which lenders might be able to help you if you do need some money in the future. It is always good to be prepared for every eventuality and even if you do not need to take out a loan like this you never know when a friend or family member might need help and you will be able to tell them about which loans might be the best for them.Read More
There are many different types of loans and when you want to borrow money you will need to examine different types of loans so that you know which will be the most suitable for the purpose that you have in mind. Most of us are fairly familiar with more traditional loans such as mortgages, personal loans, overdraft and credit cards but the newer loans such as short-term loans, are often not so well-known. It is good to understand the differences between the different types of loans so that we are aware of what we have to choose form when we are looking for a loan. It is so important to know what options are available and then we will be better able to make sure that we are picking the very best loan for us.
Short-term loans were set up to help people who could not get loans elsewhere. This means that they do not worry about your credit rating when they are lending. Although they do a credit check, they will still lend to people who have a poor credit rating. This is because they lend small amounts of money which they feel are easier for people to be able to repay.
Traditional loans will only be available to those with a good credit rating. They may even charge a higher interest rate to those that have a credit rating that is not that good, because of the risk of lending to then, but those with a really low rating they will not lend to. This means that for some people, these loans are the only type that they will be able to use.
Speed to arrange
Loans will vary in how long they take to arrange. With a short-term loan, they were designed to help people in emergencies. This means that they are set up really quickly. You will find that some lenders will be able to get the money transferred into your bank account in a few days and others will take a few hours. This means that you will need to check so that if you need the money really quickly you be sure to choose a lender that will provide that for you. With a more traditional loan, you will find that it will take significantly longer to get the money unless you already have a credit card or an arranged overdraft.
The repayment of some short-term loans is quite different to what you might be used to. The loans are sometimes set up so they have to be repaid in a lump sum. This means that you will have to find all of the money, both what you borrowed and the interest plus fees to repay in one go. This can be great for anyone who does not like to be in debt and hopes that they will be able to get their loans repaid really quickly. However, if you have borrowed a lot of money, it can make it more difficult to repay as you have to find such a lot of money in one go. Some short-term loans can be repaid in instalments though, so you need to think about this when you are choosing a loan.
Less well-known lenders
With a short-term loan it is much less likely that you will have heard of the lenders that you are picking from. Some people really like to use a lender that they know of and therefore this might eliminate this loan choice for them. However, it is worth remembering that because these types of loans are relatively new, it means that you will probably not have heard of the lenders or at least not many of them. However, if you do not know them this is not necessarily something that you should be worried about. This is because a less well-known lender will really need to make sure that they treat their customers well because they will be relying on them to either use them again or recommend them to others. You, therefore, might be surprised at how good they are.
These differences between short-term and traditional loans can be quite significant. They might be a big advantage to some borrowers but others may still prefer the more traditional methods. It is a good idea to be aware of how they work though as you never know when you might be in the situation where you need to pick a loan and these loans might be the best for you. If you suddenly find that your credit rating is not so good then these may be your only choice. If you need money extremely quickly, these could be extremely helpful to you. If you want a loan where you are forced to repay really quickly, then these could also be really useful for you.Read More