Do’s and Don’ts When Borrowing From

Consumers in the United Kingdom choose short-term payday or installment loans when an unexpected expense occurs. Choosing a lender is an important part of the process. Customer service and ease of obtaining funds are major reasons why UK consumers are choosing loans from Short-term loans can be a convenient way to meet unexpected expenses when the funds to pay those expenses are not available. Understanding the do’s and don’t with short-term loans is critical to maintaining a good financial situation.

Do Expect a High-Interest Rate

Short-term loans typically have a much higher interest rate than longer-term conventional loans. With, expect to pay 0.7% in interest every day for the duration of the loan. This may not sound like a large number, but it can add up over the term of a loan.

Do Borrow Responsibly

Failing to repay a short-term loan can have serious financial implications. Short-term loans are not mean to be permanent financial solutions. Prior to borrowing funds, carefully consider your financial situation and decide if the expense is absolutely necessary. Borrowing money short-term to pay for things such as vacations or a good sale at a shop are not good ideas. After adding in the interest that will be paid on the loan, those purchases would not end up being good deals in the end.

Do Compare Lenders

Not all short-term or installment lenders are the same. Compare companies to determine which lender will provide the best overall value. Compare customer service, previous customer ratings, interest rates charged, and ease of use among several different short-term lenders. Choose the one that best provides the assistance you need.

Don’t Borrow Without Considering Other Options

A short-term loan is not best for all situations. If the funds will be used to pay a large bill due soon, instead of taking out a loan, talk to the company and see if a payment schedule can be arranged. This can help to avoid paying a high-interest rate on a short-term loan.

Don’t Fail to Budget

If a consumer finds themselves borrowing from a short-term lender on a frequent basis, they should carefully look at their budget, reassess where the frequent needs of cash are coming from, and adjust their situation accordingly. Prior to taking out a loan, carefully look at your budget to ensure you can pay back the loan.