What are the Common Mistakes Committed with Short Term Loans?

It doesn’t matter whether you are going to use it for your broken car or medical bills. Everybody knows that there is a situation in life that you are not financially ready for. At the same time, even if you are good at managing money, it doesn’t give you the guarantee that you will have enough to cover up the cost. You are living in society – so you are expected to pay up for the services that you’ve availed, bills, people that you need to feed and even the materials you need to do your work.

It is at this moment that you need to find a solution when you meet your almost zero finances. One of the great ways that you can do this is by applying for a short-term loan, which is best to use for any emergencies. However, when you lack the knowledge about this, they fall more into debt. You can avoid such mistakes if you are responsible for what you are doing. Here are some of the biggest mistakes that people commit when they take out short-term l oans.

Doesn’t have a plan

Depending on your situation, you might be applying to a third party lender rather than go through a bank. It is alright to commit this mistake, but it would do you good if you can afford a more professional route.

When i t comes to approaching a lender when it comes to short-term loans, make sure you learn about what they have to offer to you. You need to be prepared with the following:

  • Business credentials, if you have any
  • Contact information
  • Information from your secondary loan recipients
  • Outline of the reason you need the loan and what they are going to be used for
  • Realistic and feasible timeline of the schedule of payment and how you are going to pay it back

Not paying the short term loans according to schedule

When you pay up the loans, it matters much as you pay them back in full. Keep in mind that the lender has designed the loan to be paid back in short-term – meaning that you have to pay the arranged amount, which is usually in a month. Loans are not a way for yo u to get out of poverty. The lender is expecting you to pay the money back with interest.

When you don’t pay the short term loan back right away, you are risking yourself with accruing a massive interest rate. This can put you into a greater debt than e ver before, and it will come to the point that it will be difficult for you to pay them all.

When you have applied for the short-term loan, keep in mind with the agreement that you have made with your lender. Remember the timeline that they have m entioned and make sure you stick to it. There are various online resources like the online calculators that will aid you in figuring out how much you can afford to pay back in time.

How to Save Money When Moving in the UK

It is already obvious to many people wanting to live in the UK that the costs are expensive. Still, you insist that you want to live here because you find your passion or simply want to experience living in a different environment. Keep in mind that just like what most people think about living in the UK isn’t cheap – it certainly isn’t.

The UK is the 12th most expensive nation to live in, while its capital London is world’s 6th most expensive city.

But no matter where you go, there are ways that you can live even in the most expensive places in the world if you are armed with the right knowledge like the locals do.

Sharing a flat

It is no secret that housing in the UK is very expensive. The rents are even at the highest compared to the rest of the countries in Europe. Most Brits spend almost 40 percent of their income on housing alone, compared to the average the European does – at 28 percent.

This is why it is very common in the UK to share a flat to keep the costs down. It is also considered the best way to meet new people and make friends. You can find these flat sharing sites such as Gumtree and SpareRoom. You can also go for events such as Speed Flatmating if you want to find potential flatmates that y ou want to share the space with.

Acquire a bank account

And you should do this as fast as you can. The reason for this is because it is cheaper and much easier to own a bank account locally. The good thing is that it is also easier for anyone to set up their local bank account once they have arrived in the UK.

All you need are two documents. One is that it proves your identity and the other proves the address that you are living in. This is why most of the arrivals look for a place first, although the re is also the possibility that to acquire this sooner.

Reduce household bills

It may look high to you when you take a look at your bills for the first time in your new home, especially during winter season. You might prefer to put on your jumper tha n turning up the heating.

However, there are ways that you can save money on the bills just by switching suppliers. There is more competition in the UK than before. However, the Brits are still having second thoughts with switching. It means that the be st deals are the ones offered to the new customers.

Get connected

If you already have a phone already and you just want to get connected to a British network, just search for the ‘sim only’ deals to save you the bills. If you have plans on goin g back home a lot of times, make sure you check out the roaming deals, too.

Personal Loans – What it is Like

Personal loans do sound like it is something that you borrow money personally, but there is more to that. If you are thinking of borrowing money and you know you can pay it back in a fixed amount every month, this defines what personal loan is. Below are some things that you need to learn about a personal loan and something to think about whether it is the right option for you.

Pros of personal loan

  • You can borrow money more than what the credit card can lend you
  • The loan repayments are usually offer ed at a fixed amount every month, making it easier for you to pay back and for your budget as well.
  • The personal loan’s interest rate is usually fixed, but not all the time. This all depends on which lending company you avail your loan with.
  • You get to choose how long you want to repay the personal loan. Keep in mind that the length of time that you choose for repaying the loan will affect the cost that you are charged the interest. It is usually more expensive the more you extend the length of repayment, even if it looks affordable for one month only.
  • You get even to consolidate some debts into a single personal loan, thus reducing the monthly repayment costs. However, you need to be careful as this can also mean that you extend the length of your loan and so the overall payment can be higher.

Cons of personal loan

  • Personal loans tend to have higher interest rates compared to any other ways of borrowing money, especially if you prefer to borrow a smaller amount of money.
  • Since the rate of interest might reduce the more money you borrow, there is a chance that you get tempted on taking out an even bigger loan – way more than what you need.
  • Most banks will not lend you less than £1,000 or a repayment time less than 12 months. This means that you either end up borrowing more money than what you need or forced to settle with the minimum 12 months repayment scheme.

Warnings about personal loan

Personal loans are not that dangerous unless the borrower himself is the one with problems in handling finances. However, that is not the only thing that you need to watch out for when you take out personal loans.

One of them is how the interest rates advertised are not the one that will be applied to your loan.

You sometimes see the representative APR, a short-term referring to an annual percentage rate.

Just more than half of those that applied for the personal loan and the ones approved of it should get a rate or better, but it could also mean that they are expected to pay more.

If the credit rating of the borrower is not so perfect, you might still be approved for the loan, but you will have a higher interest rate charge.

Make sure that you ask the lender for a quote on your loan before you make the deal.

When is the Right Time to Apply for Short Term Loans?

Aren’t there a lot of ways for people to borrow money these days? You can find unsecured loans, secured loans, long-term loans, payday loans and much more. One of the most popular forms of loans is the short-term loans, particularly among the small business owners. This type of loan is designed in the way of cash flow infusions to meet financing needs right away. This loan type can be considered as a versatile financial tool as a means of dealing with u nforeseen needs for added cash or to take advantage of a business opportunity.

They are a great option to take for some business owners, but they don’t make sense with the others. Here is a list of reasons that will help you decide whether or not short-term loans are for you.

You should take it if you are a business owner.

Seasonal businesses come at some point in their operation wherein there are great fluctuations in their business especially when it comes to income. However, these changes are very predictable. If you have been running your business for a couple of years, you already have a likely ability to forecast the earnings during the busy season at a great accuracy.

When you feel that you need funds to prepare for such a season and t hat you feel confident that you will be able to make the payments back once things are picking up, then getting a short-term loan is not a problem for you.

You should take one if your small business takes in high volume.

What this means is that the nature of the high-volume business that you get to keep pace with the repayment structure of the short-term loan. This type of loan is the perfect for you whenever you have an unforeseen big-ticket item or that you need to take advantage of an unexpected business opportunity.

You should take it if you have small credit

When it comes to traditional bank loans and the other forms of lending, it requires a robust credit score, however, with short-term investments it can be an option for the ones that have low credit score, even as low as 550. This is because the short-term loans are repaid typically within the span of 3 to 18 months. Lenders foresee this less risky at default and are more likely to take on the borrowers that they see as riskier.

You should take it if you have the earnings history

Since short-term loans are made based on the projected cash flow, your business requires gaining the earnings history to get qualified for the short-term loan. Lenders consider the earnings of the previous year to estimate your business’ revenue for this year. If it is your business’ first year, the lenders will be a bit hesitant in approving or even offering the short term loan for you. This is because there is no way for them to prove that you will have a n income to repay your loan.