Whether you live alone, with friends, or as a family, you may be in desperate need of some cash from time to time. There are all sorts of reasons why you may need to borrow some money, such as because of an urgent home repair, finding a deposit for a rental property, or a car breakdown. There are many factors to consider before taking out a loan, so here is a guide to short term borrowing.
Check the Overall Costs
When you look into the cost of borrowing, it’s important that you don’t just focus on the interest rate. You need to be aware of any extra costs or fees involved. Firstly, make sure to check whether the interest rate that’s being quoted is the APR (Annual Percentage Rate). This will show the total amount of interest that you will pay on your borrowing. If interest rates increase, you may find that your borrowing interest rate does the same.
Secured and Unsecured Loans
There are noticeable differences between secured and unsecured loans. Unsecured loans are for a year or longer which are fixed at a specific interest rate. Also, it’s not tied or linked to any of your assets, although the rate that you are quoted will be determined by your credit score. Secured loans are held against the value of your property, meaning that they are intended to be used as a long-term commitment, rather than as a short-term cash solution.
Paying the Money Back
If you are taking out a personal loan, the longer you borrow money for, the more chance you have of paying interest. However, this is not typically the case with credit cards as you may be able to get a money transfer card or a balance transfer card that provides you with interest free credit for up to 36 months. While credit cards can be a huge help with short term cashflow, it’s always advised to have a plan in place to pay off the borrowing when signing the contract.
Getting a Lower Interest Rate
When lenders deal with your loan application, mortgage, credit card, or overdraft, they will mainly focus on your credit score. It goes without saying, the better your credit score is, the more chance you have of securing a good deal. What’s more, you will be treated better by utility companies if you have a high credit score. There are various things that you can do to improve your credit score, such as by sticking to your loan repayments, cancelling any credit cards that you don’t use anymore, as well as reducing the amount of applications you make for credit.
Finding a Short-Term Loan
Now you have an idea of what short term borrowing entails, the final step is to find a provider who can help you. Companies like loanpig.co.uk provide short-term and payday loans which can be a huge help. Learning about how LoanPig works and what they can offer you will help you make the right decision.
Rather than rushing into borrowing money, it’s always best to take your time to work out which type of loan is best for you. There are various questions that you need to ask yourself first, such as how long you need the money for, and how best you will pay it back. Being in the know and making smart choices can be a huge help and eliminate the risk of you getting into money difficulties in the future.