It is not always that easy to know when we should be using different types of loans. It is therefore a really good idea to make sure that we have a good understanding of the different loans and how they work and this will help us to be able to then be able to make the right choice when we need to borrow some money as we will be able to match our needs up with the right loan.
What is a Quick Loan?
A quick loan is a payday loan. This means that it is a short term loan, which will have to be repaid in full when you next get paid. The idea is that you will borrow a small amount of money to pay for an emergency that will keep you going until you are paid. This means that you can generally only borrow between £100 and £1,000. The loans are arranged quickly, so that the money is available for emergencies and with some lenders you will have money within a few hours of applying, although that can vary a lot. You will need to repay everything that you have borrowed on your next payday and this means that you will need to find a lump sum of money which will cover what you borrowed plus the interest and fees charged on the loan. The loans tend to made available to most people including those that do not have a good credit rating. This means that if you get turned down by other lenders, these loans could still be available for you to use.
When Should they be Used?
Quick loans are expensive because the lenders will be taking on a risk lending to someone that has not got a good credit record. This means that it is important to think about the cost of the loan and whether you think that it will give you good value for money. If you have savings then it will be cheaper to use those instead and if you can wait before needing the money then it is a good idea to save up or wait until you next get paid. However, if you need the money urgently and you are happy to pay for the loan then this is your first step towards applying.
However, you should also consider the fact that you will need to repay the loan. It is really important to make sure that you check to see if you will have enough money available to pay it. Do not just think about the fact that you will be paid and if your pay is more than the amount you will need to repay then you will be okay but carefully calculate it. Firstly, you will need to check that you are correct in the amount you need to repay. Remember, this will not just be the amount that you have borrowed, but it will also include interest and fees and so you need to be sure that you know the full amount. The lender will be able to tell you this. Then you need to think about what other essentials you will need to pay for and whether there will be enough money to cover these and the repayment. If not, think about whether there is anything that you can do to increase how much you are earning and reduce how much you are spending so that you can manage. Only once you are confident that the loan is the right idea for you and that you will be able to repay it will you be able to confidently take out the loan.