If you have to pay unexpected expenses urgently, you may consider using short term loans, often referred to as payday loans or payroll deductible loans in UK. These are quick and effective punctual solutions. At the same time, if they are not used with care, they can cause more financial problems. If you think that a short term loan may be useful for you, you should learn as much about the subject as possible and evaluate its advantages and disadvantages before making an application. Use this guide to make the right decision as a borrower.
With short term loans, you can get cash quickly. This is to your advantage. You will have a sufficient amount of money to solve the financial emergency that you are experiencing. These loans are fairly easy to obtain as well. Most lenders have flexible qualification criteria and some do not even perform credit checks. When you borrow the money, you will have to leave a cheque on the loan amount plus interest and fees with the lender. The lender will cash it on your next payday. This way, you will pay off your debt automatically. It is possible to negotiate an extension of the repayment term, but you will continue to pay interest and other charges may apply as well. As a result, the loan will become more expensive and harder to repay. You will find that short term loans are some of the most expensive lines of credit available to consumers and UK-based companies. They, mostly, use payday UK login.
The APR (annual fee) which shows the total cost of the loan can be several hundred percent. The interest rates are high and so are the fees charged by the lenders. If you use a loan of $ 100, for example, and you have to pay it in two weeks, you will have to pay $ 120 to the lender. If you do the calculations, you will find that the APR on this loan is 426%. This is higher than the APR in traditional personal loans. The main disadvantage of short term loans is its high cost. If you find it difficult to pay what you owe, you can ask for more money or extend the term of the loan, but this can only make you into more debt. Eventually, you may end up in a debt trap that is hard to leave. Short term loans are not suitable to use when you do not have enough income to pay your expenses.
If you use them to fill the gaps in your budget, you will have even lower disposable income over the next month. They can be useful only as punctual solutions when financial emergencies arise. If you have to pay an unexpected medical bill or to buy a new refrigerator, you can use such a loan with confidence. You’ll have to manage on a smaller budget over the next month, but the situation will return to normal after that.
Source: Feast Magazine