Can I Use Short Term Loans for Emergencies?
There are some circumstances where we need money really quickly and we might turn to a loan to try to get it. It is good to know which loans yo might be able to use so that if you are in this situation and you have no savings or other money to fall back on, you will know where you can get the money.
If you have a current account then you might have an overdraft facility with it. The amount of money that you can borrow with an overdraft will vary depending on the bank that you are with so you will need to check this out and see whether it will be enough. It is worth noting that overdrafts tend to be pretty expensive. They will charge interest at 35-40% which is higher than many other forms of borrowing. You will also have no pressure to repay it which means that you could be tempted to keep it for a long time and the expensive interest will accumulate and will pay a lot for having it. Repayments are simple, in that as soon as some money goes into the account, it will automatically repay the overdraft. However, it will then mean that you will not have that money to spend, but you will have paid off some or all of the overdraft. The overdraft is always there when you need it and you will be able to draw on it by making cash withdrawals, transfers or things like this.
A credit card is often issued by a bank and it will allow you to spend money without having to pay for it immediately. You will not even have to pay interest on it immediately. You will have a credit limit and will only be able to spend up to that amount and the amount that it is will be determined by the card issuer. You will be able to get the money from the card by using it instead of cash to buy things with. If you do need cash then you can make withdrawals from cash machines with the card but you will be charged interest immediately if you do this as the cards are really designed for paying for things. You will get a statement every month and it will let you know how much you will need to repay. You will have to repay a minimum amount that will cover the interest that you owe plus a little extra but you will have the choice of repaying the whole bill and paying no interest at all. The interest rates are a bit lower that an overdraft but if you repay everything you owe in time, there will be no interest to pay at all.
A short-term loan will allow you to borrow up to £1,000 until you are next paid. It is designed especially for helping out in emergencies. Unlike the other two options you will not need to have a good credit score in order to get one though. These are designed to be something that you will be able to use quickly if you need money in a hurry. This is because they can be arranged extremely quickly and some lenders may even be able to get you the money that you need within a few hours. However, these loans can be expensive, especially if you do not repay them on time and so you will need to check when you are expected to repay and how much you need to repay so that you can make sure that you are confident you will be able to do this before you apply for the loan.