British Finance Tips

There are many loans available to us these days but at times it can be really hard to know which might be the most suitable for us. Our personal situation can also change and might determine which loan will be the best at a particular time. This means that it can be a bit confusing to decide which is the best and even whether certain loan types are suitable for us.

Problems for pensioners

If you are a pensioner, for example it could be trickier borrowing money. It is very possible that you will be able to have a credit card if you want one and possible an overdraft but you might be limited for other borrowing. Therefore, you might wonder whether a short-term loan might be a good idea.

Short-term lenders do not do a credit check. This is why they could be more suitable for a pensioner as they will lend to them even though they are not earning money. They will just need to see evidence of an income coming in and a pension payment will be seen as an income. This means that they could be a great option for any pensioner if they want to borrow money.

Things to watch out for

If you have not used a short-term loan before though, you will need to find out more about them. It is really important to be completely aware of how they work so that you can be sure that it will be the right loan choice for you. There are some quite fundamental differences between these loans and other types and you need to make sure that you are aware of these. Think about them and then decide whether this loan looks to be a good idea.

One of the first things to watch out for is the amount that you can borrow. Often a short-term lender will only offer you comparatively small amounts of money. This can be from £100 to £1000. This might be plenty for what you need, but it all depends on what the money is for. You may even find that the first time you borrow, you will only be allowed to borrow a few hundred pounds. This is because the lender may want to check that they can rely on you repaying it. They may want to start with a small amount and then if you repay that on time, they will trust you more and lend you more. This will vary between lenders but you need to make sure that you find out, so that you can use one that will be prepared to give you the money that you need.

A short-term loan will not last long. This can be fantastic for anyone that does not like to be in debt for very long. However, it does also mean that you will need to find the money to repay the debt quickly. This might be okay, but it will depend on how much money you have borrowed and whether your income will be enough to be able to cover that. The repayments are set up to come out of your bank account on the day that you get paid and that means that you are likely to have the money available. However, you will need to check carefully, before you take out the loan, to make sure that you will have enough to cover it. You might have other payments coming out on that day or you might need to keep some money to pay for things later in the month. Therefore, it is wise to make sure that you do some calculations before taking out the loan and then you will know whether you will be able to afford to repay it.

What to do

It can be wise to make sure therefore, that you are totally aware of what short-terms loans are, what the different types are and how they work and then you will be able to know whether they will be right for you. As we are all individuals and our financial circumstances change over time. We will find that we need different types of loans at different times. Therefore, having this knowledge, will mean that we will always be prepared in any situation. We will know what loans exist and therefore be able to pick the ones that will be the best for us.

If you do need money, make sure that you analyse your specific needs and then start looking for a loan. Then you will be able to match up the best possible loan for your needs. Once you have a loan type in mind, then you can look at the different lenders and find one that will work for you. Compare them on things like cost, amount you have to repay, customer service and other factors that are important to you.

Many people might take on a short-term loan because it does not last long. However, they do not always last exactly the same amount of time. This means that you still might wonder exactly how long they will last. There is no definitive answer as it will depend on the lender so it is good to investigate this if it is something that is important to you.

Payday loans

Payday loans are repaid in a lump sum. This means that they are repaid in full all at once. They are also paid when you next get paid. A direct debit is set up so that the repayment will leave your account on the day that you are paid. This means that how long the loan lasts for will depend on how close to your pay day you are. So, it could be that you have a good few weeks until you are next paid or just a few days. In theory the loan could last anything from 1-31 days.

Instalment loans

With instalment loans the repayments are over a few months. It is not repaid in a lump sum but spread over a few months. The amount of time will depend on the lender. It may also depend on how much you borrow. IT is not even easy to make a guess as to how long it might be, but it is certain that it will be longer than a payday loan.

There is another factor that will determine how long a loan takes to repay and that is whether you manage to repay it on time. Obviously, there is a due date with a loan which is when you should repay it. However, it is possible that you will not have enough money to cover it and then the loan will last for longer.

As the repayment dates tend to be on the day that you are paid, you may just feel that you will have enough money available to repay it. However, this may not be the case for a few reasons.

If you have borrowed too much money it may just be that your income will not be enough to cover the repayment. If you borrow £1,000, for example and your income is less than this you will just not have enough to cover it. If you borrow an amount you think you can cover but forget to add on the extra cost of the fees then this could be a problem. It might be that you will not have enough money after all. It could also be the case that you have other money coming out of your account on that day and you will not have enough left by the time the loan repayment is due.

It is really important to do everything that you can to make sure that none of these things happen though. This is because if you do not repay on time, you will be charged extra money. No one wants this to happen. Even though there is a cap on how much you can be charged, you still do not want to pay more than necessary for your loan. There are things that you can do which will help you to make sure that this does not happen.

Firstly, you need to completely aware of how much you will be repaying and when. It is wise to either use the calculator on your lenders website or ask them and know for sure before you take out the loan. Then, you need to think about whether you can afford this. Make sure that you do not just think vaguely that you feel it will fine but that you actually check properly. Look at your previous bank statements and see what payments you have coming out of your account on the day when the loan repayment is due. This is likely to be the day that you are paid. You need to carefully calculate whether there will be enough money left to make the repayment. Make sure that you think about anything that you might have to pay that you have paid for a few months. You may have things you pay for quarterly or annually that might need to be paid.

It can even be wise to have a backup plan. What if things go wrong and you know there will not be enough money? What if you have taken an overdraft, for example and when you get paid, it will be paid off and there will be nothing left to repay the loan? You might be able to cut back spending elsewhere but it is probably easier to find some ways to make extra money. You might be able sell some things, do some freelance or temp work, earn a bit doing online surveys or tasks or things like that.