Applying for a loan can be daunting. There are over 473 short-term lenders in the UK, so it’s no surprise that many consumers find it difficult to choose the best provider. Of course, just as there are different providers to choose from, there are also many products to consider, which can make the process even more confusing. So, where to start?
First, it’s important for consumers to take the time to understand the different types of loans available – as well as the benefits and drawbacks of each – before making a decision. Short-term loans, for example, are usually for smaller amounts that are typically paid back within a month.
As such, this type of loan is intended to fill in a financial gap; it’s usually used as a quick fix or to cover an unexpected expense before the borrower’s next regular instalment of money comes in.
At Ferratum, we currently offer short-term loans between £50 and £500. We work out the term of the loan based on the day that your wages arrive, and agree the amount depending on a number of factors, including credit score, suitability and affordability.
We always aim to be as helpful as possible to our customers, so understanding their current financial situation is crucial. Having this information is important for making sure that that customers won’t miss any repayments or borrow more than they can comfortably repay.
Another option available to borrowers is instalment loans, which are basically an extension of short-term loans. These loans tend to be for slightly larger amounts and can be repaid in regular instalments over several months. Our Ferratum instalment loan currently offers consumers loans between £300 and £1000, to be repaid over 2,3 or 4 months.
This model allows consumers to manage a sudden financial crisis or unexpected expense, as payments can be spread evenly over time.
Just like short-term loans, instalment loans are becoming more and more popular, as it’s common for people to receive a large bill or other unexpected expense that needs to be paid straight away, such as car repairs or replacing a faulty boiler.
Some customers in this situation may choose to opt for a guarantor loan instead. These loans are also suitable for consumers that need to borrow funds, but these agreements involve a third party who guarantees to pay the loan if the borrower is unable to.
With these loans, the guarantor signs a contract to indicate that he or she is responsible for repayments, should the consumer default for any reason.
One more option is a logbook loan, which can help consumers to secure a loan against their vehicle. This type of loan gives full ownership of the vehicle to the lender until the loan is repaid, at which point, the ownership goes back to the individual that has taken out the loan.
All of these loans have their own unique uses and benefits, so it’s crucial for borrowers to consider each type of loan very carefully. For example, will the money be used for a ‘quick fix’ such as paying for an urgent trip or school activity, or is it for something more long-term, like house repairs?
If consumers are clear about exactly what the loan will be used for, it will be much easier to choose between the different options available.
Regardless of which type of loan a borrower chooses, however, it’s vital for consumers to understand exactly what they are agreeing to. Always look at the terms and conditions very carefully to make sure that there aren’t any hidden costs or conditions, as the cheapest deal isn’t always the best.
Above all else, it’s vital that borrowers are aware of how much they will need to repay and that they’ll be able to meet this commitment.