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It’s that arid season between pay cheques, when the purse strings are tight and the back account is sorely lacking. If there’s a sudden drama or financial emergency you might need a cash top-up quickly. But what is the best option, with so many fiscal short term loan alternatives available? Should you try a UK Payday Loan company or a different line of credit?
Once a cash-destroying situation arises, it’s easy to turn to your credit cards to relieve the financial burden – though it’s not always the most fiscally sound option. For starters it’s becoming increasingly difficult to actually get a credit card, with many consumers finding it difficult to establish and maintain a credit history. Speed of delivery is also an issue, with credit card applications usually taking at least 14 days to be processed and approved, while many payday lenders provide the money within hours. Credit cards can also issue application and balance transfer fees and while many offer zero interest offers for a limited period, it’s important to keep track of when these offers end and your repayments increase. If you’re able to use a credit card for a purchase and be in the position to pay off the full amount quickly, this may be the option for you.
A logbook loan allows you to borrow money against the value of your vehicle. Usually, if you require a large sum of money and have been refused a bank loan for any reason, this type of cash injection can provide the answer. Unlike a payday loan – where the loan duration is over a short period of time – these loans tend to cover a longer spell, so your repayments will stretch over a longer amount of time. A major consideration is that if you default on your payments, your vehicle can be at risk. This could make repayment of other loans and bills problematic if your car is essential for your main source of income.
Consumer group Which? recently claimed that some bank overdrafts can be just as expensive as borrowing money by other methods. Certain banks have altered the way their overdrafts are structured, so rather than paying an annual rate, a daily fee is applied, with additional fees included if the borrower overspends and goes over their overdraft limit. There has been criticism that these fees have not been made clear enough to consumers, whereas most online payday loan companies expressly display the borrowing and repayment amount. Ensure you discuss these matters fully with your bank when applying for an overdraft.
Attempting to get a loan from your bank can be a complex and fairly demanding experience. Because of their frequent use as a loan provider for purchases of houses, cars, weddings or other expensive purchases, the bank will assume you want a sizable chunk of money and will want to know details and plans concerning why you want the money, what you plan to do with it and when you will be repaying. Partly because of the amounts often being offered or lent, the application and approval process is much more involved.
Other Short Term Loan Alternatives
We have tried to list some of the most common financial short term loan alternatives. There are others which involve borrowing from family or friends or using a guarantor to back your loan. These will be discussed in future posts. Depending on your need, quick loans and other forms of online loans could provide a faster solution compared to the options listed here. We also work with line of credit providers such as Safety Net Credit and flexible installment loans up to 6 months.