There are quite a few different types of short-term loan. It can be quite confusing because they can go by different names. It is good to have an understanding of the different types so that you can make a choice if you feel that you need one. There are some fundamental differences and so you need to know what these are so that you can make the right choice.
You might see short-term loans also referred to as cash loans, online loans, no credit check loans, bad credit loans and all sorts of names. However, there are really only three main types of short-term loan and these are payday loans, instalment loans and guarantor loans. They all have one main thing in common. This is that they are available to most people, including those that has a bad credit rating and cannot get any other type of loan.
Guarantor loans– a guarantor loan allows someone with a bad credit rating to borrow thousands of pounds. However, in order to do so they have to find someone who is willing to cover any repayments they miss who will act as their guarantor. It is a good way to borrow a significant sum of money if you need it and cannot get it elsewhere. However, you will need to make sure that you can find a guarantor who not only has a good credit rating but is willing to help you out like this.
Payday loans – a payday lender such as Emu.co.uk will also lend money to those with a poor credit rating but they are designed for emergency borrowing. This means that loans can be arranged very quickly. In fact, they will be able to get the money to the borrower within a few hours in some cases. This does vary between lenders though but it is unlikely to take more than a few days to get money this way. The lenders tend to lend between £100 and £1000. Payday loans are repaid on your next payday. This means that they are very short and therefore you are not in debt for long. You will have to repay in a lump sum though and therefore come up with all of the money to cover the loan and the fees and interest all in one go.
Instalment loans – with instalment loans you will not have to repay all in one go. You still get the advantages of being able to get a loan quickly and to borrow even with a poor credit record, but you do not have to repay it with a lump sum. You can repay in instalments, which can make it easier. This is because you can spread the cost and that will make it more manageable. So if you take out a loan for £1000, for example, you will not have to find the money to repay it all at once but you will be able to repay it over a series of months.
So as you can see, there are quite a few difference between the different types of short term loans. You may think that there is a certain one which stands out more than the others. However, it is best not to really judge them like this. This is because you will find that whether one is significantly better than the other will depend on the situation you happen to be in. It might be that you need a large sum of money and then the guarantor loan could be the answer. However, if you need a smaller amount but know that you will be able to repay it quickly, then the payday loan could work for you. The instalment loan will be better for those that cannot afford to repay a large lump sum of money.
It is good to also be aware that there are lots of different lenders offering these different loans. They will each vary a bit as well. This means that you will find that once you do choose a particular loan type that you like. Then you will need to compare the different lenders. They may vary in price, but you may also find other differences as well. It is a good idea to get a good overview of each one, so that you can make sure that you are using the loan and the lender that suits you the best. It can take a bit of time to find out but it will mean that you will end up getting a loan that will give you the best possible value for money. You will also not have any regrets with regards to the loan that you choose and this is important as well. It can be really annoying if you find a better loan and then wish that you had gone with that one instead. Therefore, make sure that you do take the time to do the research and then you can be really pleased with the decision that you have made.