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You may urgently require cash at some point in time. Perhaps your credit cards have been maxed out, your savings are depleted, or your bank requires too much time to process your loan application. In cases like these, where you need money on short notice, you may be considering short-term loans. There are pros and cons to these types of loans, and it’s important that you understand what you’re getting yourself in to before you sign on the dotted line.
Financial planners often eschew short-term loans, owing to their high interest-related repayments. However, they may be a viable option for you if you have exhausted other avenues. Depending on the urgency of the situation, it may be best to go with a payday loan. Note that these loans are typically in the region of £100 or more – so the interest repayments on them are limited if you can stick to your repayment plan. Given that these lines of credit are much smaller than a typical bank loan, your interest repayments are not as bad as you may have been led to believe.
Questions You Need to Ask Yourself before You Accept a Short-Term Loan:
• Are you aware of the repayment period?
• Are you aware of the total APR on the loan?
• Are you allowed to borrow the amount you need?
• Are you required to put down any collateral for the loan?
• Are you allowed to use the money for anything you want?
• Are you able to pay the instalments on time, for the duration of the loan?
We’ll give you a little insight into short-term loans in the UK. They are unsecured loans that do not require you to provide any collateral upfront. You will be required to show evidence of your employment status, and a credit check will typically be conducted. The application process is completed online, and you will be informed within a day, often within an hour, as to whether you have been approved.
In the UK, short-term loans can be used for any purpose whatsoever. If you run into trouble, and cannot repay the loan on time, you may be able to roll it over for a longer time. We strongly encourage you to use a loan calculator to determine your repayment amounts. Always read the fine print of short-term loan applications, details on rollovers and associated fees on the principal amount of the loan.
The cost of borrowing from a short-term loan provider should be presented to you up front. Always work with FCA regulated brokers, not foreign operators offering their services to Britons. Whether you need £100, £200, £300 or another amount, three aspects should be available to you up front: the total amount of credit, the duration of your loan agreement and the interest payable. Fairness, transparency and efficiency are the hallmarks of top providers.
Additionally, you will want to ensure that you can contact the customer service department of the company quickly and easily. Check for telephone numbers, fax numbers, SMS numbers, email, live chat functionality and a land-based address. The more contact information there is available, the better. Transparency and trust go hand-in-hand. Professional and courteous customer support is a tell-tale sign of what to expect from these payday loan companies.
There are traditional lenders and non-traditional FCA-approved lenders in the loans arena. Banks and established financial institutions are considered the standard, but they often take too much time and require too much paperwork to process your loan application. That’s the reason why the UK short-term loans market is a hive of activity.
You should always know your credit score before you apply for one of these loans. You may find that you have an excellent credit score, entitling you to lines of credit at lower rates of interest from banks, credit unions and loans providers. A good credit score can serve you well when you need money fast. The decision to apply for a loan hinges on all of these factors. If you have explored all your options, and you’re comfortable with the company and the repayment amounts, this may be right for you.
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