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