Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
It is no secret that a short term loan or payday loan are not everyone’s ideal way to borrow money. Not only do they usually have a much higher interest rate than longer term loans, they seem to be a debt that many people do not repay and install fall behind with.
There has been plenty in the media of late regarding the negatives of short-term loan companies, however, it is definitely not all doom and gloom. In fact, some people find that payday loans are actually an incredibly useful way to borrow money, especially if they need a small amount, only for a short period of time.
To help you learn more about short term loans and how to make sure that they work for you, we have put together our short-term loan survival guide, which covers the basics of short term loans and how to get through them with relatively few battle scars.
When you need money fast, it can seem as if you have no other option than taking out a short term loan. However, the truth is that there are other options open to you. One of them is to ask a friend or family if they could lend you the money that you need, it can be hard to ask to borrow money and you might feel awkward, but if they do say yes then this option is going to help to keep your repayments to a minimum and ensure that you don’t have to worry about interest or late payment fees. Another alternative, although not one that would come highly recommended is a loan shark, these may give you the cash quickly, but there are a number of drawbacks to using a loan shark in order to borrow cash. One of the main ones being that they are often unscrupulous people to deal with and they are not regulated in any way.
Before you even start to apply for any short term loans, you need to make sure that you are getting the very best rate. There are a number of different lenders offering short term loans so it can be relatively competitive. This means that there are some better rates to be had. If you don’t have the time to shop around each individual payday loan company, yet still want the very best deal, then it really does pay to utilise a comparison tool. These can be found online and will take your circumstances into account, before delivering you with a short term loan option list, so that you can decide what is best for you.
The FCA or Financial Conduct Authority are there for a reason. It is their job to make sure that any financial companies, such as loan provider are acting within a set list of regulations and that the person who is borrowing the money from them is protected. It is important that you check if any company that you are borrowing money from are regulated by the FCA, as this will ensure that you are going to be treated fairly and that they will lend to you responsibly too. There will also be a place that you can go to should anything go wrong and you will feel comfortable that your issues or complaints will be properly dealt with.
One of the most important things that you need to take into account if you are planning on taking out a short term loan is the fact that you are actually going to be able to repay the loan after you have taken it out. If you do not repay the loan payments, then you are going to fall behind. This not only means that it can be harder to catch up, but also that you may end up paying late payment fees on top of the repayments that are you already struggling to make. This is only going to make the situation worse and could affect you for a much longer time.
When it comes to repaying a short term loan, you are going to need to think about how much you are paying back in the long term. This figure should include not only your total repayments, including any interest that is going to be added, but also any late repayment fees if they should be applied to your loan agreement. These can be quite considerable depending on the loan provider and therefore should be avoided at all costs.
One important consideration when it comes to short term loans is whether or not you could actually survive without one. Chances are, unless it is an absolute emergency, one that you can see no other way out of, you could get by until you have some money through being paid, or through an alternative method of borrowing. Sometimes it can seem like you have no other choice, only to find that when you take the time to really think about the situation that you are in, you actually can wait and take a more cautious approach.
A common trap that people seem to fall into with payday loans, particularly if they are in a low-income family or if they are struggling with their finances, is repeat borrowing. This is when they end up taking out subsequent payday loans, all to pay off the loans that they have already had to pay off, or to cover any other debts that they need to pay on a regular basis. In order to make sure that you only need to borrow the once in order to get your finances on track, you should look at budget management. There are a number of tools out there that you can use, in fact Citizen’s Advice have a useful webpage that you could take a look at if you need some help with your budgeting.
Whilst you hope that any borrowing that you may have to make goes smoothly, there is still going to be a chance that things can go wrong. It is important that you understand where you can go if things do go wrong, as well as what your rights are as a borrower. Money Supermarket have a really useful blog post which covers what to do if there is an issue with your short term loan which is definitely worth a read. Even if things all seem to be on the straight and narrow and you don’t see there being any problems on the horizons.
One final point that is important to consider is your financial future. You need to be aware not only of how to fix your finances at that moment in time, but how to control them in the future too. It can be hard to learn how to manage your money and ensure that you using your money the best that you can, especially if you feel that you are lacking in support. One website that is there to help is The Money Advice Service, which, as the name suggests was developed in order to help people to take a hold of their own finances and stop them from getting into long term debt or perhaps even worse, having to declare themselves bankrupt because of struggling to repay debt that they have taken out at a time of need.
Short term loans are just that, a short term solution to your financial issues. They should never be used on a long term basis and you should avoid taking them out in the future. One of the best things that you can teach yourself is to control your finances. Look at your spending and ascertain ways that you can save money, which will help you to not only put money away each month for the future, but also allow you to save towards anything that you are going to want to buy or pay out for.
So, now you know how to survive payday loans, you are definitely going to be better prepared should you need to take one out in the future. Not only will you have a better understanding how to get the best rate, but you will also know more about how you can make a short term loan work for you and your needs.
You will also understand how to avoid getting yourself into trouble in the future and learn how to manage your finances so that you can have a much more positive financial outlook.
For further information on Fernovo’s loan rates and terms go to Fernovo.com.
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