Credit is effectively any kind of arrangement where anyone is able to obtain goods or services without paying for them straight away. There are a number of different ways that you can do this, depending on the type of credit that best suits your situation, what you’re eligible for, and how much you want to pay for the credit. Here are a few of the options:
An overdraft. An overdraft is an arrangement with the bank, which allows you to spend more than you have available in your account. This type of credit is extended up to a certain limit and you can repay and then redraw the money during the agreed period of the overdraft. Normally, fees are charged to use an overdraft and you’ll pay interest on whatever amount of it you use. If you go over the overdraft limit there are usually penalty fees to pay.
A loan. There are numerous different types of loans that mean you can borrow and amount of money for a specified period of time. Unlike an overdraft you need to make regular repayments on a loan – normally on a monthly basis – and these will include a payment of the amount that you borrowed, as well as some interest. There are sometimes arrangement fees to pay for borrowing the loan and interest is agreed with the lender in advance.
Short term loans are available for anywhere between a month and a couple of years and offer the opportunity to borrow a smaller amount of money without having the repayments hanging over you for a long period of time. This type of loan is ideal if you want to obtain cash quickly and then repay at your own pace.
Unsecured loans are loans that not backed by collateral (for example a house or car) but are instead obtained on the basis of creditworthiness. Most personal loans are unsecured loans, which are loaned without the need for security.
Secured loans are normally much larger in amount than unsecured loans and are secured by an asset of some sort. With a secured loan if the money cannot be repaid then the lender is able to take the asset and sell it in order to repay it. Mortgages are a type of secured loan that uses the property you’re buying as collateral.
Overdraft Protection – line of credit loans are a service that’s linked to your bank account that will automatically deposit funds in your account when your balance reaches a predefined threshold. For more information see a lender we work with that provides this facility – Safety Net Credit.
Payday Loans – A high cost credit short term loan option which is the service we offer on CashLady website. As a broker that specialises in UK payday loans for emergencies and unexpected bills, we offer a range of solutions from a panel of around 20 lenders. Payday Loans are not a long term solution. Payday loans could also help people with a history of bad credit.
Credit Cards. A credit card is essentially a line of credit that is extended by a credit card company in exchange for interest that is charged on whatever is spent. Repayments are normally made on a monthly basis and can either be for a minimal amount or for a larger sum. You can spend and repay the credit as it suits you, as long as you don’t go over the credit limit agreed with the borrower. There are many different types of credit cards, from credit cards designed for those with a bad credit rating to cards that have a low interest rate. You can also find cards that charge 0% interest on purchases or on balance transfers, which can be the cheapest options depending on the way you want to spend.