Warning: Late repayment can cause you serious money problems
For help, go to moneyadviceservice.org.uk
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%
This article contains information about products/services offered by us as well as those that we do not offer.
Author: Internal Marketing Department
Advantages of Short-term Loans Compared to Payday Loans
Editor: This author has used 'Payday Loan' to imply a single instalment loan payable in full on the borrowers next payday.
People have the option to take advantage of loans in times of urgent need of cash. A loan is used to overcome any financial needs or problems which normally occur in unexpected circumstances. This is a situation when there is a shortage of funds and using a loan can solve it.
The repayment schedule is one considerable factor in determining the type of loan that would best address one’s need for cash. Thinking twice before taking a payday loan is advised. Determine if the surplus amount of cash from one months pay would cover repaying the loan in full. If there is then a payday loan may be suitable, if not then other options should be considered.
There are several alternatives to payday loans. An example of which are instalment short-term loans. This is a way to get the money needed with a short-term repayment schedule. Acquiring this type of loan gives access to cash especially when an emergency arises. It does not require a lengthy loan approval process as may be the case with a bank or credit card. A shorter time span processing is an advantage to any borrower in an emergency.
Credit approval for short-term loans does not necessarily rely totally on the credit history of the borrower. Most lenders require a steady income and proof that the loan is affordable to the borrower.
Short-term loans of this type offer repayment through installments up to often one year which gives far lower monthly repayment amounts. Although the total cost of the loan will be higher. This also removes the need for rollovers. It can also be extremely expensive when the loan is not paid on time, thus incurring additional charges until such payment is made.
Taking advantage of short-term loans definitely allows the borrower to solve many financial crisis. Where a typical payday loan borrower may end up in a debt trap this is less likley with a short term instalment loan.
Nevertheless, any borrower must evaluate their situation, particularly their capability to repay an acquired loan.