If you have a sudden crisis, or emergency, and need money to make repairs or purchase essentials, you may be looking into a short-term loan. A quick loan is a fast cash solution which allows you to borrow between £80 and £500, which you will usually repay on your next pay day. There is an application process, there are criteria to meet, and checks will be done. You need to be able to meet your loan terms. If you are unsure about taking out a quick loan or find yourself rejected, there are many quick loans alternatives.
Using an overdraft facility
Overdraft interest rates and charges may work out to be just as expensive as quick loan interest rates. If you have an overdraft facility it is important that you understand when you will be charged for going overdrawn and how much. Some banks have one-off charges or charge for every overdrawn transaction. Other banks charge a daily fee for every day that you are overdrawn. They will also charge interest on top.
Your bank could have a combination of charges which include a daily fee, a fee for every transaction in overdraft, a charge for having an account with an overdraft, and the interest charges too. Banks have been in the news and heavily criticised for not being clear about their charges, and for charging too much.
That said, an overdraft can be incredibly useful for when you have unexpected transactions or debits. Or, in an emergency where you quickly need to complete a purchase, or pay for services, and know you have money coming back into your account quickly, to take you back into a positive balance.
Credit Cards as quick loans alternatives
Credit cards can be difficult to obtain, especially with a poor credit history. Credit card applications can be detailed, and take around 14 days to be processed and approved. There can be application and balance transfer fees. As with any type of credit facility, or lending, you should properly understand your credit card terms and charges.
If you take a credit card out with an opening or transferring discount or offer, you should understand when the offer ends and what happens when it does. Will your charges, or interest rates increase? If so, by how much?
A credit card if you have one can be a fast, short term solution to a cash crisis. However, if you don’t pay off your credit card balance at the end of the month and only repay the minimum amount you will pay interest every month. If you continually pay off just the minimum balance the amount you accumulate and pay in interest can be huge. Sometimes far, far greater than the interest on taking out, and quickly paying back a short-term loan.
Logbook loans can also be used as quick loans alternatives. With a logbook loan, you can use the value of your car or another vehicle to borrow money. If your vehicle is worth quite a bit, a logbook loan can give you quick access to a larger amount of money. Logbook loans can work if you have been refused traditional or quick loans, have very poor credit or need a larger amount than a quick loan can offer. A logbook loan can be for a longer period than a quick loan. Logbook loans have a large amount of risk. If you default and don’t pay, any of your loan repayments, your vehicle can be seized. You will have lost the vehicle immediately and be in a potentially worse situation.
You should always remember that a logbook loan will probably not give you the actual value of your vehicle. They may give you the “book” value but it certainly will not be what you paid for your vehicle, and may not even be the amount you would get if you sold your vehicle privately.
Quick loans alternatives – Pawnbrokers
Again, pawnbrokers can be viable quick loans alternatives if you own something of value, but have poor credit or do not qualify for a loan. They can also be another fast option, as a pawnbroker will give you cash for your item straight away. Usually, you can either borrow an amount, which if you don’t repay within the agreed time you lose your item. Or you can sell them the item. Your item is known as a “pawn” or “pledge” for the money.
There should be a written agreement in place with terms and you should only use a pawnbroker who is a member of the National Pawnbrokers Association. A pawnbroker will charge you a monthly or daily interest rate. You will need to pay back any interest. A pawnbroker arrangement, like a logbook loan, will give you a much lower amount as a loan than your item is actually worth.
Borrowing from friends or family
You may be able to borrow money short term from friends and family as a quick loans alternative, and agree between you when and how you will pay the money back. This could be an easy and painless solution if you pay the money back when you promise, and your friend or family member is happy. But, what happens if you suddenly cannot pay them back? What happens if they need the money sooner than when you agreed to pay it back? Money is often a reason why friends and family argue.