It happens to the best of us and it is certainly nothing to be ashamed of but when you are facing a bit of a cash crisis, where should you turn to get the best deal on a short term loan?<\/p>\n
In this article I am going to walk you through the 5 main options that you have open to you. I\u2019ll try to give an honest overview of their various pros and cons and guide you to the option that best suits your needs. I’ll try to include relevant information on rates of interests, fees and charges and give representative examples of how much you will repay over the term of the loan.<\/p>\n
So, let us begin.<\/p>\n
<\/a><\/p>\n Credit unions are not-for-profit organisations that typically cater for savers and borrowers in a particular geographical location or profession. They are now starting to offer short term loans to their members as an alternative to the more expensive options detailed on this page.<\/p>\n Some will require you to already be a member and have some level of savings before they agree to a loan, while others will carry out some background checks before lending to ensure that you are able to repay what you borrow.<\/p>\n The rate that a credit union can charge on a loan is limited by law to 3% per month which works out at an APR of 42.6% but typically they will be just 1% per month (12.7% APR).<\/p>\n We would always recommend that you start you search for a short term loan at a credit union and you can find out where you nearest one is using the aptly named website Find Your Credit Union<\/a>.<\/p>\n <\/a><\/p>\n As the most well know and the most widely advertised of the short term loan options, payday loans have become a common feature in society but the have not been without their scandal. There have been warnings from many bodies responsible for family finance advice, primarily because of the very high typical APRs applied to the product.<\/p>\n There is a good reason for this though \u2013 the purpose of such loans is usually to cover a very short period where an individual requires quick extra cash and the loan is typically unsecured. The name \u201cpayday\u201d comes about because that is what most loans are for \u2013 to cover outgoings between now and the next payday of the individual.<\/p>\n Well it depends on the institution you borrow from but one of the market leaders, Wonga, have a representative APR (annual rate of interest) of 4214% but because you can only borrow the money for up to 30 days the actual monetary values look more reasonable.<\/p>\n At the time of writing, a \u00a3400 loan from Wonga for a period of 10 days will leave you with \u00a3445.49 to repay in total over the term which is 11.37% in interest.<\/p>\n I believe that looking at things this way actually makes payday loans look a bit more reasonable.<\/p>\n Short term payday loans are best for: people who require fairly small loans at very short notice as decisions can be instant (mostly online with no need to fax documents) and the money can be in your bank account in as little as 15 minutes.<\/p>\n <\/a><\/p>\n There are a few operators in this market which differs quite significantly from more traditional payday loans. With cheque based loans, the borrower is required to send a copy of a cheque guarantee card along with a few blank cheques that the loan company use as collateral should you fail to repay your loan in the period agreed upon.<\/p>\n The benefits of this type of service is that you generally benefit from much lower representative APRs meaning the overall cost of borrowing is less.<\/p>\n For example, at the time of writing, Mister Cheque offer a representative APR of just 295.74% which is a great deal cheaper than the Wonga example stated earlier.<\/p>\n Some companies also allow you to complete the process without any credit check which can be great for those with bad credit ratings or CCJs.<\/p>\n The cons are clear though, because you have to physically post documents to them, the cash is unlikely to hit your bank account for at least a day (assuming you post them first class). The extra effort required on your part is reflected in the lower rates though.<\/p>\n Cheque based payday loans are best for: those who can afford to wait a day or two for the cash to hit their bank account.<\/p>\n <\/a><\/p>\n Security statement: a Log Book Loan is secured on your vehicle.<\/b><\/i><\/p>\n This type of credit is provided to those who have a car or other vehicle against which to secure it. Since this loan would be secured against your vehicle, if you fail to keep up the payments, you are at risk of having your vehicle seized and sold to repay the remainder of your loan.<\/p>\n The downsides of this type of loan are clear \u2013 you can lose your car.<\/p>\n The advantages of this type of loan are that you can get a larger loan in comparison to the previous 2 payday options (up to \u00a350,000) and that, because the loan is secured, you do not have to undergo any credit checks.<\/p>\n A representative APR for a logbook loan is 478.30% which is by no means the lowest rate you can achieve but with repayment windows ranging anywhere from 1 day to 48 months, you can at least schedule the repayment for further in the future if you should wish.<\/p>\n Logbook loans are best for: people who require slightly more credit that a typical payday loan can provide and that have a car that they can, if the worst comes to the worst, managed without. For those people who are unemployed or who have bad credit, this option allows you to get a loan thanks to the security you are putting up.<\/p>\n If you use your vehicle for work purposes of consider it vital to everyday life, a logbook loan is probably not for you.<\/p>\nOption 1 – Credit Unions<\/h2>\n
Option 2 \u2013 Payday Loans<\/h2>\n
So how much will you pay in interest?<\/h3>\n
Option 3 \u2013 Cheque Based Payday Loans<\/h2>\n
Option 4 \u2013 Logbook Loans<\/h2>\n