There seem to be a growing market of short-term loans with different types available such as payday loans and log book loans. We may wonder whether we should consider taking out this type of loan or whether they are something that we should avoid.
Who are short-term loans for?
Short-term loans came about because there were no loans that were suitable for those that wanted money really quickly and had a poor credit rating. If you have a poor credit score then you will often be turned down for regular loans and may not even have access to a credit card or an overdraft or if they have may have maxed them out. However, as the loans are so fat to arrange it means that that are suitable for anyone that wants money really quickly and has no other quick way of getting hold of it.
There are limitations though in who can take out a short-term loan. It is necessary to be over the age of 18 and a UK resident. You also need to have a regular income. In the case of a log book loan you will need a vehicle as collateral and it will need to be worth more than the amount of money that you are borrowing. In the case of a payday loan you will need a bank account to set up a direct debit for the repayment.
Advantages and disadvantages
All loans have the disadvantage of being costly and sometimes stressful. With a short term loan the stress is usually short lived as it has to be repaid quickly, so as long as you have the money to be able to do this then it can be quite straight forward and repaid within a few months. There will still be cost of course and some people feel that they are much too expensive. The reason for this is that they are taking a risk because they do not do a credit check. This means that there is a chance that their customers may not repay the money that they borrow and so they charge extra to cover those costs. The costs mount up particularly if you do not repay on time. Then you get fees added on which can add up quickly. There is now a law though to prevent charges getting too high which should help.
However, the loans can be organised very quickly, possibly within a day and so if you need money in an emergency they are very useful. If you cannot borrow money anywhere else they are also very handy as chances are that you will be able to borrow money from them. They also require repayments when you next get paid which means that you do not have to worry about paying them back until you know that you will have some money to be able to afford to do this. They even set up the direct debit for the day that you get paid so that you do not have to remember to make the repayments. This means that there is no chance that you will forget to pay them. There is also a growing number of short-term lenders which means that they have to compete so they are providing better value for money and lower prices as a result of this.
Are they right for me?
It is always a good idea to think hard before borrowing money and make sure that you really need it. Ensure that you need the money to start with and that a loan with Emu.co.uk really is necessary. Then you need to make sure that you are getting the right type of loan. Loans differ in the amount that you can borrow, the repayment terms and of course the cost and so it is wise to check the different types and choose the one that is best suited to your needs. Then you need to compare different lenders to see which offers the best value for money. Once you have picked the loan you think is right you need to make sure that you will be able to afford to repay it. Take a look at how much the repayments cost and how many you will have to pay and think about how you will afford to do this. After all of this consideration you should be able to work out whether they are right for you or not.
If you are still not sure then it could be worth discussing with a friend or family member. They might be able to see things from a different point of view and this should help you to more easily make up your mind. They should be able to look at the advantages and disadvantages with you, let you know if they think there are any alternatives as well as looking at whether they are good value for money or not.