What should I know about quick loans
There are some important facts that every customer who is considering a quick loans should know.
1) Application fees
Many brokers and lenders don’t charge fees for applicants. You should ensure that you have checked with the broker or lender before applying. There are no fees.
2) Repayments and affordability
When a lender offers you a loan, you will be presented with a schedule of payments before you accept.
Quick loans typically have a repayment term of three to one year. Your repayments are due on the agreed day for each month. Each monthly repayment covers a portion of the original loan amount plus interest.
The broker or lender will ask questions about your household income, and expenses when you apply. They will ask you questions such as how long you have been working at your current job and how much you make. They will ask for details about how much you spend on rent, mortgage, council tax, food and transport.
Why are all these questions asked? Lenders need to make sure you are able to afford the loan, and that you have enough money at the end each month to cover all the monthly payments. You and your family should not be in financial distress by borrowing money.
Lenders will be able to make decisions faster if they have a better understanding of you and your money management.
3) How much money can I borrow?
An “affordability evaluation” is part of a lender’s application. This is the section of the application where they ask how much you earn each month and what your expenditures are.
A finance company will evaluate the amount of money that you have left after paying your monthly repayments to determine if they will lend money to borrower.
The general rule is that the more money you have after paying your monthly loan repayments, the more favorably the bank will view your application.
4) APR and interest rates
The interest rates charged by banks and credit cards are often higher than those offered to customers.
APR is an acronym that stands for “Annual percentage Rate” and describes the cost of a loan, including interest rates and fees, if it is taken out over the course a year. Because the APR for short-term loans that are only a few months long is calculated as if the repayment period were over twelve months, the APR can often seem extremely high.
Maximum amount of loans
Lenders will typically limit your access to their loan services. They will usually require you to repay an existing loan before offering you another.
While it is possible to have multiple loans running at once with different companies, you should not do this.
You should never use quick loans to pay for financial emergencies, or to cover unexpected expenses. If you are struggling to make ends meets month after month, it is best not to take out multiple quick loans simultaneously.
Paying your bills on time
Before you apply for any financial product, make sure you are certain you have the funds you need and can’t get it from anyone else. If you are experiencing a financial emergency, you might consider asking a friend, family member or boss for an advance on your monthly salary to see if they could help.
Failure to pay your monthly repayments can have serious financial consequences long-term. For many years, it will be much more difficult to find other credit sources (including mortgages and credit cards)
One of the six top UK debt charities can help you if you’re already struggling with debt. They are easy to use and free of charge.
These charities include:
- National Debtline
- Debt Advice Foundation
- Money Advice Service
- Citizens Advice