I think it will certainly be fair to say that there can always be a time when a person needs to borrow money. This can be down to a high amount of different reasons. Some people may then need a high amount of money as they are looking to make some form of expensive purchase of some kind. This could possibly be for a new car perhaps or maybe someone is looking to put money towards home improvements etc. There can then be others who may only need a small amount of cash. They could just need some financial help paying a bill or they need some additional funds to help make their wages last until they are next paid from their employer. Now regardless of what any person needs any amount of money for, if they have this saved they can then use it as required to pay for whatever they then need. Some people might even have enough put away through savings to pay for their requirement and need outright. Turning to savings is always nice but unfortunately it is not available for everyone and if this is then the case the money will need to be borrowed. Short term loans is just one way people use when money is needed to be borrowed.
Understanding Short Term Loan Borrowing
When most people need to borrow money the chances are first of all they will approach friends and family to see if they can get the money this way. This will be much more common for any potential borrower if only a small amount of money is needed. They will know that doing this can often enable them the chance to take out a short term loan or any kind of other borrowing interest free. This will be great as people in these cases just pay back exactly what they loaned in the first place. People here as well can get their loans quickly and then just repay back that debt as soon as they have the required funds available again. This as a borrowing option is just like turning to potential savings as it is not available for everyone.
If people ever need money due to have a small amount of funds in need of a cash emergency for example then using a short term loan may be the better option. Some many different lenders provide these as a borrowing option. Payday lenders will most likely however, be the source that provides this finance. They aim their financial products towards people with bad credit as these are often obtained by people who have other borrowing options limited. It can often provide people with loan amounts up to £500.00 for the same people to then repay the debt over a short period of time hence the term short term loan. Never is the loan ever under any circumstances to be used as a long term borrowing option. People have to then repay back the finance within a time frame of up to twelve months.
As individuals we are all subject to having a credit rating or credit score and this information is gathered and formulated thanks to the Credit Reference Agencies. Our score will be directly reflective of our previous and current performance regarding credit based commitments. Records are held for previous credit agreements for a period up to 6 years and as such how you chose to repay credit commitments of the past can have a lasting effect on your credit future. What many of us may not be aware of is the fact that even small credit agreements can and do effect our ability to obtain credit in later years; such as communication suppliers. This means even the most ‘basic’ of credit facilities will and do exist within an individual’s credit reference file. In instances where agreements of this nature have been either poorly repaid or defaulted entirely, an individual may later discover that they are unable to obtain other forms of credit; such as Hire Purchase agreements or even a mortgage. This is why it is so fundamentally important to ensure that any form of credit, large or small, is managed and repaid as it required.
Assist Short Term Loans
Whether it be a short term loans lender or a mortgage provider, all lenders will access an individual credit report before making a decision as to whether their product is suitable. Of course lenders of short term loans will be looking for a different ‘set’ of results compared to that of a mortgage provider given the sums of money being considered by each. That though, is not to say one will except ‘poor’ credit more so than the other and this is really the decision of the individual lender. Certainly as fair as mortgage providers are concerned, it would be fair to stay they are looking for examples of successful and timely repayments as fair as prior credit performance is concerned.
For consumers who are aware that previous credit commitments have been poorly managed or even defaulted through lack of repayment altogether, they may also be aware that obtaining future credit can be difficult. For consumers in this position the sensible use of short term loans may be an option worth considering. Given the fact that short term loans are generally for no more than £500.00 in value, there may be an opportunity to demonstrate you can now repay a small credit commitment as required. Using short term loans and repaying them as is requested will allow an updated ‘imprint’ on your credit reference file and furthermore may highlight to potential future lenders that you have gained experience in managing your credit based commitments in a sensible manner. Short term loans in their current form are generally flexible and therefore able to offer a number of different repayment terms; at the point of applying. So making a sensible and affordable decision concerning the right type of loan, for your individual needs is likely to be achieved with a level of ease.
When it comes to borrow money there are always a high number of different things for people to consider. That person looking to borrow the money must know that they one hundred percent need the loan in question and then if so they have to then select a realistic amount to then borrow and this amount must also then be affordable so the debt can be comfortably repaid by any borrower. The actual type of finance can then be selected and here there are different options always. People can often apply for short term loans where they borrow small amounts over limited periods of time. A common short term loan would be the payday loan. Instalment loans are usually the common alternative and here people tend to borrow larger amounts for repayments then over a longer period of time. Credit cards are also a very common way to borrow money from the financial market place. As well as considering the type of finance someone wants they have to also choose the lender to apply through and this can be a tough choice due to the amount of variation here. Below I will explain further about loans and will explain in detail the kind of loans direct payday lenders can offer to people when they need cash.
As the name would suggest a common loan a direct payday lender can offer would be the payday loan itself. This is when people take out amounts somewhere between £100.00 and £500.00 but sometimes more and then repay the debt within a single month on your next available payday. A payday loan is the most common short term available in the market place and whenever a repayment becomes due it will always be done so within just thirty one days. These loans are aimed to help people with poor credit and people who have found it difficult to get credit elsewhere and they certainly can work out to be a very expensive way to borrow money. The interest can vary on payday loans mainly dependant on the lender chosen however most likely lenders can charge around £25-£30 per £100.00 borrowed by someone and that is expensive interest especially considering how little time people take out the loan for.
It can now also be common that direct payday lenders can now offer people the chance to borrow small instalment loans. People can sometimes borrow more here than what payday loans offer. They can also though just offer similar amounts to payday loan borrowing but then they allow people the chance to pay for the loan over longer periods of time in instalments. People for example would borrow maybe £400.00 but then rather than pay in excess of £500.00 to clear the loan in full people can pay the debt over longer periods of time making the debt easily to repay and afford. Whenever anyone repays short term debt in instalments however, remember the longer the loan is taken out for the more repaid towards the debt. I have always liked the flexibility given on some instalment loans in the financial market place.
As consumers considering a form of short term credit, there are several different types to keep in mind. The first of which is the type of loan we are considering and the second is the type of lender offering the loan. Many of us are aware of short term loans or payday loans as they are also known. Having been available for nearly a decade now, most of us have seen an advert, heard a story or used the product at some point in that time. The market as a whole is currently in a transitional period and this means the type of loan available is changing. The changes which are taking place are certainly for the good of consumers and have been brought above thanks to the new guidance of the Financial Conduct Authority. This governing body, also known as the FSA, have been put in place to better protect consumers who use the market and also to give better guidance to lenders who want to consider loans in a consumer friendly and affordable manner. The introduction of the FSA means now that the market has better control and therefore consumers can make better and more informed choices when it comes to their short term borrowing needs. Today we will take a brief look at the type of loans offered with in this market and more importantly, the difference between direct payday lenders and the financial brokers.
In order to fresh our memories and update previous understandings of this market, let’s first review the type of loans which can be found in this market. The first type of product is considered the classic lending resource of the market and is known as a payday loan. As the name suggests a payday loan is a small loan which is borrowed until your next employment pay date. The amount payable for such loans is often reflective not of the time period for borrowing but the specific amount borrowed. An example would be a customer borrowing £100.00 until their next pay date. It is likely in the vast majority of cases such a loan would cost £100.00; whether repaid in a week or 20 days. The newer and more flexible type of borrowing is the instalment loan, which like the payday loan, allows consumers to borrow a small amount of money but allows repayments to be made over a pre-agreed number of instalments. Often in the case of instalment loans, the interest is applied on a daily basis.
What many consumers may not be aware of is the fact that within this market there are direct payday lenders and then there are financial brokers. In the case of a broker they do not actually offer a loan directly and instead offer consumers the service of locating a potential lender, often at the cost of a one-off fee. Direct payday lenders are different and often considered more favourable. Direct payday lenders will consider your application directly and the great news is they will not charge a fee for the service, whether the loan is ultimately possible or not.