A Guide to Short-Term Loans

Short-term loans are usually considered to be loans that are paid off within a year of taking them out. They are used for all sorts of things such as buying a car, going on holiday, or simply having enough money to make it through the month. There are different types of short-term loans available, and you should choose the one that suits you best. Here are the five main ways to borrow money over the short term. Pay Day Loans Pay Day Loans have become popular over the last 15 years or so and there are many lenders in the market. You can search for lenders using a company such as Payday UK who will search the market for you and get you the best deal available. This is a short-term loan designed to help you make it through the month if you have an unexpected purchase or overspent last month. They are a fantastic way of eking out your money and making sure that you can still put petrol in your car once your wages are spent. However, you should make sure you can pay the money off with your next paycheck, otherwise the interest can add up and the loan can get expensive. Flexible Loans Flexible loans are generally available from the bank. They are similar to a traditional unsecured loan, but the payment terms are less rigid, meaning that you can pay it off quickly if you want to. They will set up a monthly payment for you, but you can overpay or pay the loan off within the set term without accruing any penalties. This is fantastic if you want to make a large purchase and pay the money off using your bonus, commission, or other non-guaranteed income. The quicker you can repay a flexible loan, the less interest you pay overall. Buy Now, Pay Later The rise of the buy now, pay later loan has been growing in popularity over recent years. It is simple to use as the providers work directly with online or in-store payments. Essentially, the provider buys the goods for you and then you pay them over a set period for the goods. This doesn’t cost you anything if you keep up to date with the repayments as the providers take their payment directly from the retailer. However, if you miss payments, the fees will start to add up. It is unlikely that you will have to undergo a credit check to take out this type of loan but the money your provider will give you will be in the 100s rather than the 1000s and they can stop your account if you do not make the repayments on time. As the provider is buying the goods for you, this means that you are not covered by the Consumer Credit Act, so if you don’t want your purchases, you will not be able to seek redress through your provider or credit card company. However, the fact that you pay over a longer period should make returning the goods easier. Credit Card A credit card is an agreement to lend you money up to a specific amount. For example, you might have a credit limit of £5,000 on your credit card which means that you can’t spend more than this. It is an effective way of buying goods and spreading the repayment as you do not have to pay a set amount back each month. Instead, you have to make a minimum payment based on your outstanding debt. As there is a direct link between you and the retailer, you are covered by the Consumer Credit Act if you want to return items, meaning that if the store refuses to give you a refund, you can claim the price of your purchase back through your credit card company. Many people use their credit cards for this reason alone and if you shop around for a card that offers 0% on purchases this can be a cheap way of borrowing money in the short term. However, the interest accrues if you only make minimum payments, so make sure you can pay off your balance quickly if you do not want to incur interest charges. Overdraft An overdraft is a credit facility that is set up to run alongside your bank account. This is a clever way of borrowing money if you know you are going to get paid in the next few days as it is flexible and easy to dip in and out of. The interest rate can be high though, so avoid this type of short-term borrowing if you can’t pay it off at the end of the month. These five types of short-term loans are fantastic if you only want the money for a little while. However, if you know you are likely to carry a balance over each month, a longer-term debt solution might suit you better.
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A Guide to Short-Term Loans

Short-term loans are usually considered to be loans that are paid off within a year of taking them out. They are used for all sorts of things such as buying a car, going on holiday, or simply having enough money to make it through the month. There are different types of short-term loans available, and you should choose the one that suits you best. Here are the five main ways to borrow money over the short term. Pay Day Loans Pay Day Loans have become popular over the last 15 years or so and there are many lenders in the market. You can search for lenders using a company such as Payday UK who will search the market for you and get you the best deal available. This is a short-term loan designed to help you make it through the month if you have an unexpected purchase or overspent last month. They are a fantastic way of eking out your money and making sure that you can still put petrol in your car once your wages are spent. However, you should make sure you can pay the money off with your next paycheck, otherwise the interest can add up and the loan can get expensive. Flexible Loans Flexible loans are generally available from the bank. They are similar to a traditional unsecured loan, but the payment terms are less rigid, meaning that you can pay it off quickly if you want to. They will set up a monthly payment for you, but you can overpay or pay the loan off within the set term without accruing any penalties. This is fantastic if you want to make a large purchase and pay the money off using your bonus, commission, or other non-guaranteed income. The quicker you can repay a flexible loan, the less interest you pay overall. Buy Now, Pay Later The rise of the buy now, pay later loan has been growing in popularity over recent years. It is simple to use as the providers work directly with online or in-store payments. Essentially, the provider buys the goods for you and then you pay them over a set period for the goods. This doesn’t cost you anything if you keep up to date with the repayments as the providers take their payment directly from the retailer. However, if you miss payments, the fees will start to add up. It is unlikely that you will have to undergo a credit check to take out this type of loan but the money your provider will give you will be in the 100s rather than the 1000s and they can stop your account if you do not make the repayments on time. As the provider is buying the goods for you, this means that you are not covered by the Consumer Credit Act, so if you don’t want your purchases, you will not be able to seek redress through your provider or credit card company. However, the fact that you pay over a longer period should make returning the goods easier. Credit Card A credit card is an agreement to lend you money up to a specific amount. For example, you might have a credit limit of £5,000 on your credit card which means that you can’t spend more than this. It is an effective way of buying goods and spreading the repayment as you do not have to pay a set amount back each month. Instead, you have to make a minimum payment based on your outstanding debt. As there is a direct link between you and the retailer, you are covered by the Consumer Credit Act if you want to return items, meaning that if the store refuses to give you a refund, you can claim the price of your purchase back through your credit card company. Many people use their credit cards for this reason alone and if you shop around for a card that offers 0% on purchases this can be a cheap way of borrowing money in the short term. However, the interest accrues if you only make minimum payments, so make sure you can pay off your balance quickly if you do not want to incur interest charges. Overdraft An overdraft is a credit facility that is set up to run alongside your bank account. This is a clever way of borrowing money if you know you are going to get paid in the next few days as it is flexible and easy to dip in and out of. The interest rate can be high though, so avoid this type of short-term borrowing if you can’t pay it off at the end of the month. These five types of short-term loans are fantastic if you only want the money for a little while. However, if you know you are likely to carry a balance over each month, a longer-term debt solution might suit you better.
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