Why repaying some short term loans can seem expensive

When it ever comes time to borrow money, a high number of different people may or may know that there can often be a number of different borrowing options. This is just one of many different reasons why no one should ever rush into applying for finance and why it is always important that they explore the different options as to what is available to them. Then no one should ever rush into applying for finance nor should they take the first thing that becomes available and disposable to them. From the financial market place these days’ people can often look to obtain both short term loans and instalment loans when a loan is required. This way people have the ability to take out a range of different loan amounts for repayments then due back over a number of different repayment terms. Credit cards I have certainly found to be another very popular borrowing option. They of course allow people the chance to pay for different items as well as withdraw cash on credit up to set limit. Below is extra information focusing mainly on short term loan borrowing.


I myself has certainly noticed that in recent years more and more people have turned to short term loans when they need to borrow money. With these loans it is very common that people borrow small loan amounts for repayments then due back over a short period of time. It can be common that short term loans are obtained for amounts somewhere between £100 and £500 for people to then repay back the debt over a selection of different repayment terms. Any loan to then be classed as a short term loan must then be repaid back to any lender who granted the finance within a twelve month maximum period of time. Any loan that is then repaid over longer cannot be classed as that way of borrowing. These loans often provide people with cash quickly when it is needed and a payday loan is often a common way of this borrowing.

Short term loans can certainly be applied for and obtained quickly when people need usually relatively small amounts of cash. Another benefit of that way of borrowing is the fact that it helps people with bad credit get cash when it is needed. Short term loans are well known for helping people with bad credit. This can be useful for people who have their other borrowing options somewhat limited yet they need to borrow just a small amount of cash. Some financial direct payday lenders are the most likely providers of these kind of loans. They mainly aim their loans at people who have bad credit and for people who may have been declined elsewhere for finance. Now these lenders know that lending to such people can be risky as they may not repay that debt, it can then be because of this that some short term loans can then work out to be expensive.


Payday Loans can Often be an Expensive Finance

When it ever comes time for someone to borrow money, there may be some different people who do not know exactly what borrowing options they have. They may just not know what different options they could be entitled to and for this reason it is never wise to ever rush into applying for finance before the different options are looked into. Some finance types are certainly better than others in what they can offer to people. From the financial market place these days’ people can look to obtain both short term loans such as payday loans and instalment loans if a loan like borrowing is required. This way people can then look to borrow a selection of different loan amounts for repayments then due back over a number of different repayment terms. As well as loans people can also look to credit cards as a way to borrow money. This is another very common way to obtain finance. It can allow people the chance to pay for different items as well as for them to withdraw cash on credit up to a set limit and this is then done by the use of the card itself.

Payday Loans Often Expensive Finance

Payday Loans Often Expensive Finance

In this article I am focus solely on payday loans and other short term loans and explain what these provide to a range of different borrowers who need to obtain cash. I have certainly found that in recent years it seems more and more people have turned to this way of borrowing as a way to obtain finance when they need to. When I say this way of borrowing I mean payday loans and other short term loans. This can often be a way for someone to obtain a small cash amount of usually up to £500.00 for that person to then repay the debt back over a number of different repayment terms. For any loan however, to be classed as a short term loan it must be repaid back to the lender within a maximum time frame of twelve months. These loans are commonly known to help people get cash quickly but for a very limited period of time. Some of these short term loans can be expensive.

When people think about short term loans they will most likely start to immediately think about payday loans. Now although payday loan from payday lenders is a common short term loan when available it is certainly not the only way of short term loan borrowing. With some of the loans people can borrow the same kind of amounts than payday loans but they can then look to repay this debt over a number of months rather than clear the loan in one go which a payday loan would require. This may be a better kind of borrowing as people can get a small cash amount as before but they can then spread the cost of the debt over a repayment term that suits both them and the borrower. This will be easier than clearing the debt in one go as a payday loan would always require.

How to Plan your Costs When Taking a Payday Loan

As with any form of credit based agreement, when deciding on a suitable payday loan, it is important to ensure the resource chosen is affordable. This means time and care must be taken to understand the options available and as a result of this research, which option is most suitable for your individual needs. Payday loans have been around for a long time now, over a decade in fact and in this time the options available to consumers have only ever got more varied. Payday loans therefore come in a range of different amounts and repayment terms and are not as they once were; restricted to a lump sum repayment. Many of us reading this may have believed that a payday loan only came in this form but in the last few years a number of changes has meant nowadays there is plenty more choice and therefore flexibility. It appears flexibility has increasingly become key to successful and affordable payday borrowing and that’s what makes for good news for consumers. Today we will be looking at applying for a payday loan from a customer point of view and furthermore, what considerations need to be accounted for before agreeing to a new loan.

Taking a Payday Loan

Taking a Payday Loan

As mentioned above making sure a payday loan is affordable is the most important factor when considering the options which are available. Given the choice that now exists, it would be sensible to break the types of loan available to consider down into two types. The first of which is the payday loan and the second are the instalment loans. Where the payday loan has been around and available longer, the repayment terms are much more limited. Instalment loans are newer and actually offer more repayment terms; as the name suggests. This means when deciding on a form of payday loan, whether in the classic sense or newer form, there will be different ways in which repayment can be made. The payday loan requires a single and one-off repayment to repay the amount borrowed, usually within a months period. Instalment loans allow a number of agreed monthly instalments to be made until the total loan is repaid. It is important to remember that the longer the term of repayment; therefore the greater the number of monthly instalments, the higher the total cost of borrowing will be.

The above means there are ways in which the repayment amount due can be increased or decreased depending on what repayment amount for your payday loan needs would be affordable. Completing a simple yet effective budget for your monthly incomings and outgoings will help you to ensure what spare income you have on a typical month, which is a very useful starting point. From this point it will be a much simpler task in deciding what sort of loan would fit your needs. Where spare income is limited it may be a sensible choice to select a slightly longer repayment term. In instances where a larger sum of spare income is available, the classic payday loan may be the right choice.

Borrowing Instalment Loans For When Cash is Needed Quickly

There can always be times when someone needs money and this can be down to so many different reasons. There can be some people who may need a large amount of money as they are looking to make some form of expensive purchase. This could possibly be for a new car perhaps or maybe someone is looking at putting money towards a new house etc. There can then be others who may only need a small amount of money to possibly just have some help paying an unexpected bill or they could just need some help making their finances last until they are next paid from their employer. Now regardless of whatever anyone ever wants the money for, if they have this saved away they can then look to use it as required to pay for whatever they need. Some people may then even have saved away to pay for their requirement outright. Now turning to savings is always nice when it is available however, this is not the case for everyone. If it is not available then a person may then have to look at borrowing the money.

When it comes to borrowing money when this is needed, some people may then not know exactly what options they have available at their disposal. For example if a loan is required then both short term loans and instalment loans could then be available. This is a way that a person can then look to borrow a selection of different loan amounts for that person to then repay the debt back over a range of different repayment terms. It can then be common that someone with instalment loans can borrow more and then they can repay that debt back over a longer duration. A mortgage for example is actually one of the most common instalment loans that people tend to borrow. So many people from all over the world of course have or have had a mortgage at some stage in their lives.

Borrowing Instalment Loans Quickly

Borrowing Instalment Loans Quickly

I have found that borrowing instalment loans can have a number of different benefits for that person. It can give people flexibility on any amount borrowed. They can borrow a range of different loan values and can then repay the debt back over a suitable repayment term that suits both them and the lender. Another benefit of this borrowing is the fact that people can often get their cash quickly when it is needed and I always feel that this is going to be important. People can apply for instalment loans mainly online or sometimes it can be done over the phone. The application process can often be done in just a matter of quick minutes. Now if that same financial application is then accepted by the lender most of the time they will look to pay out that borrower that very same day. They will often pay out the loan into the borrowers bank account and these details will be provided at the application process.

Applying For Finance Through Direct Lenders

If anyone is needing to borrow money and has then submitted some form of financial application, they then may be curious as to what happens during their application next. This may vary of course depending on the lender that is chosen but most of them will carry out very similar checks before they reach an overall lending decision. There can certainly be a high number of different factors that can contribute to the lending decision and these will be explained below in further detail. I will also explain the three main application stages for when people are applying for loans through direct lenders.

The first part of most applications through direct lenders would be the part where a potential borrower has to input their details regarding personal information. This is when someone will be asked to fill out information regarding such things as their full name, their home address, their date of birth as well as often their employment details. They can then also be required to complete a section that asks for both their bank and their card details. All of this information will be required before any lender can reach a decision on the finance. In certain cases people can then be requested for documentation in order to get something progressed further. This can be to validate something or confirm something as requested from that lender. For instance maybe a utility bill could be requested to provide someone’s address.

Finance Through Direct Lenders

Finance Through Direct Lenders

Another common stage on every direct lenders application will be the credit check on the person applying. Any lender will have to calculate the chances of the borrower repaying the debt back once they have taken it out. They can normally have access to the person applying credit files and they can then use this information to see how they have fared with repaying other debts in their past. They will never be able to know exactly whether a person has the intentions to repay the debt but they can work out the likelihood of this being done. If someone does have bad credit and a low credit score as a result they can then possibly find it tough to get finance approved. Some direct lenders however, having said that might still be able to help them get finance.

The final stage on every financial application will of course be the final decision. This is when a borrower finds out whether or not they have been approved the finance. If they are accepted they can then often quickly liaise with the lender and see how long it will take them to obtain their short term loan or other finance type. If however, on the other hand if the person is declined then should they wish to, they can then move on elsewhere to try and get the finance approved by another lender. There can be a high number of different factors that can go into the final decision including things such as credit and affordability checks. Once the lender has reached their decision they do not have to justify it and they could just say unfortunately at the moment we as a company are unwilling to lend.

Loans For Bad Credit

There can always be times when people need to borrow money and to be honest there can be a high number of different reasons as to why money is needed. There can be people who need to potentially borrow a large amount of money as they are looking to make an expensive one off purchase for items such as a possible new car perhaps or maybe someone is even possibly looking at putting down some kind of deposit for a new house. Other people who don’t need to borrow large loans/amounts of money may just need some help as struggling financially on the short term front meaning they need some help possibly tiding their finances over until the next time they are paid from work.

Now when it comes to borrowing money people may or may not know that there are a different number of borrowing options available for a high number of different people to choose from. I think it is safe to assume that when most people are looking to borrow money from their friends and family is the first place they will possibly turn to. They know any loans taken from this source can be repaid when they have the money available again, under no legal requirement and the money borrowed can be repaid interest free. Any other money taken form a lender will be applicable to interest and some lenders offer daily rates of interest meaning the longer people take out the loan for the longer it takes to repay the debt and the more repaid back to that lender. If borrowing money from friends or family is not an option then lenders will have to be used.

Direct payday lenders or other financial lenders can offer people these days a range of different borrowing options. People can typically take out different types of both short term and instalment loans. People with this is mind can take out different loan values and then repay the debt over a number of different repayment terms. Both of these borrowing loans are very common in the financial market place however they each will provide benefits when borrowed as well as negative factors when taken out. Credit cards are also a common way to borrow money as these allow people the chance to pay for different items or withdraw cash on credit up to a set limit via the actual use of the card itself. That is another very common type of finance. If anyone was looking to borrow one of the above yet they have poor credit then they may realise that getting accepted for some of it may be hard or it can work out to be expensive. Short term loans for example are common at looking to help people with poor credit. Anyone with poor credit may find that because the lender looking at the loan knows it could be risky lending to such people, they may charge higher interest as a result.