CashLady Reveals 6 Things to Consider Before Applying for Short Term Loans

Things rarely go as planned and there are often many unexpected expenses that require us to spend money we hadn?t anticipated. Taking out a short-term loan can really help, but there are a number of things to look out for before signing on the dotted line.

In this article, award-winning brokers CashLady reveal 6 things to consider before applying for a short-term loan.

1. Use a regulated short-term lender

More important than anything is to ensure you are borrowing from a company regulated by the Financial Conduct Authority (FCA). Every lending company in the UK must hold an FCA licence to be considered legal.

You do not want to borrow money from a company that will charge high or hidden fees, or demand ridiculously high rates of interest.

Once you know you can trust the company, you can then start to think practically about how much loan you need.

2. Consider how much you really need

Taking out a short-term loan can have a hugely positive effect on your circumstances if you need the money urgently. But as they are a more expensive option, it pays to only what you actually need.

Taking out too much will mean you are paying interest on money you didn?t need to borrow, while not lending enough money could leave you short and defeat the purpose of taking out the loan in the first place.

3. Understand the repayment requirements

Short-term loans are usually taken out to help you get out of a tight financial situation. The last thing it should do is make the situation worse.

Before committing to a short-term loan you must look at the repayment plan, you are signing up to and make sure you are financially secure enough to repay it without any issue.

Defaulting on a short-term loan can have an effect on your credit score which will make it more difficult to secure other forms of credit in the future.

4. Check the terms and conditions

You should always take the time to read the terms and conditions of any loan to ensure you are fully aware of everything you are signing up to.

The Financial Conduct Authority dictates general rules for all licensed lenders, but each organisation will also have their own particulars that differ from each other.

Everything should be made clear in the terms and conditions, but if you are unsure, it pays to ask before agreeing to proceed. It will also serve as a good test of the company?s customer service to see how helpful they are in responding and explaining things to you.

5. Learn the interest rates

The interest rates charged by the lender play a big role in dictating how much money you will have to pay back. Do your research to compare and check where you can secure the best deal.
Your existing credit score also has an impact on how much interest you will pay, so check this before proceeding.

Some companies also advertise their ?best? interest rate, but this may be different to the actual rate applied to your loan.

6. Be aware of your credit history

As we mentioned above, your credit score will have a direct impact on the amount of interest you will be charged. The better it is, the lower the interest rate will be.

You should also be aware that every time you apply for a loan, it will leave a ?footprint? on your credit history. Whether successful or not, this will also have a long-term effect on your credit score.

If you do not have a strong credit rating and are not confident, you will secure the short-term loan. It may be best to consider alternative options instead of potentially damaging your rating even further.

Company :-CashLady