If you are considering short term loans, you may wonder whether they will work for you. It is well worth considering this. Even if you know a lot of people that have used them successfully, it is good to contemplate whether this will be the case for you. We are all very different and so what works well for one person may not work out for someone else and so you will need to have a good think about the situation you are in yourself. There are certain things that you should think about which could be a big influence in your decision.
Amount you can Borrow
To start with you need to think about how much money you need to borrow. Most short-term loans will tend to lend up to £1,000. This may be enough money for you, but even if it is it is worth noting that you may not get this much. Lenders do not always loan the full amount that they advertise. With short-term lenders they will want to build up some trust with their borrowers first. This is because they take on borrowers with a poor credit record and so they may have had a record of not repaying loans in the past. This means that the lender might want to just lend them a small amount of money to start with and then if they repay that successfully then lend them more. Therefore, you should check with the lender to make sure that they will be prepared to lend you the amount of money that you need, before you apply for the loan.
It is also well worth looking at the cost. The cost of loans can vary a lot and lenders will vary in how much they charge as well. Therefore, finding out the cost can mean that you will need to look at a selection of different lenders and find out how much they charge to see what you might be likely to have to pay. You will find that they will have an interest rate and if you go to a comparison website this is likely to be the way that they calculate who is cheapest. However, you need to beware of using the interest rate. Firstly, interest rates tend to either be the annual percentage rate or the annual equivalent rate. If you are comparing different rates between different lenders then this will mean that you will not be comparing like for like. Also, some loans will not just charge you interest but they will charge fees as well. The annual equivalent rate is the interest rate calculated if the fees are added in which means if you compare these rates then you get the best idea as to which is cheapest. However, this can all be rather complicated. This means that it can be better to find out what the cost will be in monetary terms. There are often calculators on the lenders websites which will allow you to calculate this. This will be handy because not only will it allow you to make a proper comparison between the different loans but you will be able to see exactly how much they will cost you.
It is important to find out how the loan is going to be repaid. This is because you will need to work out whether you will be able to afford the repayment. If you cannot pay it, you will have extra charges to pay and no one wants to have to do this. So, make sure that you work out whether you will be able to afford those repayments by checking your bank statements, before you sign up.