RSS Feed

Related Articles

Related Categories

An expert’s guide to short term loans

17th August 2015 Print

Everyone needs a loan from time to time and it’s not always easy to access funds. 

A short-term loan is often the only solution, but it’s important to be aware of all the facts before going ahead with a loan.

No hidden secrets

If you have credit problems and your bank refuses your application for an overdraft, a logbook loan from CCP may be your only option. You will use your car as an asset and the money lent to you depends on the value of your vehicle and its age. If you own your car under a finance contract you won’t be able to borrow against it. The facts and figures are available on the website and there are no hidden costs or charges. You will be made aware that should you fail to keep up the repayments you’ll lose your car. 

Payday loans are expensive

According to the financial expert Martin Lewis on his website, Money Saving Expert, this form of credit is, ‘high cost… with more tricks than Paul Daniels.’ Some borrowers get into a cycle of debt by using these companies. Despite the new regulations introduced by the Finance Conduct Authority (FCA) to protect consumers, fees from payday loan companies can be a lot more expensive than the interest rates charged by credit card companies. If you use a payday loan company this can also have an adverse affect on your credit score, and may prevent you from accessing mortgages or other forms of credit in the future.

Sometimes short term debt is necessary

If you do need money in an emergency, you don’t have any assets, and your credit rating is appalling, then a payday loan may be your only solution. Work out a budget and ensure that you can actually afford to repay the loan on time. Late repayment costs can quickly mount up and on top of fees, you’ll also have to pay increased Annual Percentage Rates (APR). Not all payday loans cost the same so it really does pay to shop around. 

0% Credit Cards

If you are able to, a cheap way of accessing credit is to find a credit card that will offer you 0% as an introductory offer. Some card companies will offer you 21 months interest free. Make sure that the 0% covers purchases as well as balance transfers. It’s always a good idea to read the small print of any credit agreement and you must repay the amount that you’ve borrowed within the time limit, making sure that you keep to the monthly minimum repayment schedule. 

Do you really need a loan?

All experts agree that you should only use a short-term loan if you are sure that you can make the repayments on time and have factored interest rates and borrowing fees into the equation. In 2014 the Daily Mail published a survey that revealed bank lending has dropped by £365 billion. Short-term loans are here to stay but it’s up to the consumer to carry out research and compare interest rates as well as terms and conditions. If you can’t afford to borrow, then don’t.