6 month loans
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Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290%
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Author: Internal Marketing Department
6 month loans are perhaps the newest way for payday lenders to stay in the short term credit market after they have faced severe criticism regarding their practices and with the looming threat of a complete elimination of the industry as we know it, it has become imperative for payday lenders to find alternative ways of providing affordable short term credit. 6 month loans are a good answer to their problems. 6 month loans are essentially cash advances provided to a borrower which are payable over a period of 6 months. The obvious advantage that these types of loans have is the longer loan period which enable a borrower to pay the amount in equal installments on a monthly basis or on a mutually agreed upon date. The not so obvious disadvantage that, assuming the same interest rate, the total cost of these longer term loans will be higher as you have had the money for longer. This must be balanced with the advantage of smaller monthly repayments and where possible the shortest term should be chosen where the monthly amounts are still affordable.
These are just some of the things one should know while opting for these types of loans. These are important considerations to know before you apply for such a loan.
There are some other advantages that these loans also carry:
Easy Accessibility: A lot of borrowers have stated that the main reason they opt for these loans is their sheer convenience. 6 month loans, just like traditional payday loans are easily accessible and that could well explain their popularity. Since there is a lack of alternative lines of credit available in the market today, when it comes to short term loans, borrowers are going for easy accessibility and convenience in documentation, as compared to the lengthy processes involved with mainstream lines of credit.
Equal Repayment: One of the main things which is attracting many borrowers towards these types of loans is the fact that they have now been provided with the ability to repay the loan amount within a period of 6 months in equal installments so they feel they are in a position to keep aside a certain amount of income every month, anticipating the loan expense.
Fixed Interest Rates: There are some 6 month loans available which usually have a fixed interest rate as compared to other types of loans, where the market rate determines the rates charged by the lenders. As a result of this, you will continue to pay the loan amount with the same amount of interest charge irrespective of the market rate, which can sometimes turn out to be a blessing in most cases.
These are just some of the advantages that 6 month loans carry. All 6 month loans should not be considered under the same category as payday loans as there are short term loans available for 6 months which are much more reliable instruments and carry equal installments over the loan period which can be suitable to a borrower.
The final thing that should be considered is whether there are any other credit options available to the borrower. The obvious, and often cheapest one is to ask a family member or close friend for a loan. In these circumstance you will often pay no interest (or maybe buy them a bottle of wine or bunch of flowers to say "Thank you"). But beware - failure to pay may harm your friendship.