Here at Moolr, we are passionate about finding finance for all, including for those that have been declined in the past. However, we are also passionate about doing the right thing for our customers. And in some cases, that means not sourcing a loan. A loan is a vital resource for many, but it is not the answer for everything. With that in mind, we looked at things to consider before taking out a loan.
The Loan Market
Most short-term loans are for a year or less, and some borrowers take out them regularly to deal with their financial situation. Most short-term loans should be used though to deal with short-term issues such as a repair or unpaid bill. In 2017 alone,short term loans contributed more than £23 billion to the economy.
The ease of access and simplified loan processes has made them a popular loan option.
Things To Consider Before Taking Out A Loan – Compare your options
There are many options available when it comes to getting a payday or short-term loan. Thus it’s important to compare them to find the one that best fits your needs. Look at the loan amount, features, the APR, and how quickly the lender stipulates the borrower repays the loan repaid to ensure the terms and conditions matches your needs.
Review the eligibility criteria
While lenders still accept applications if you have a bad credit history sometimes, they still produce criteria that is required to be met. Check the minimum age, income and residency requirements as well as the loan amount and terms that are offered. More importantly, ensure you check whether the lender is licensed under the FCA. All of Moolr’s lenders are of course licensed. you can find such information on the website of the lender along with the registration number.
Things To Consider Before Taking Out A Loan – Only apply for the minimum amount required
Lenders should not offer you a loan larger than they estimate you can afford. Nevertheless, you should still work out what repayments you can manage. Check that it makes sense for you to accept the terms offered in your circumstances. Only apply for a loan with repayment terms that will work for you. Ensure your budget can contain the repayments. Whichever type of loan you apply for, it is important that you budget in advance to ensure you can afford to pay it back on time.
Budget to cover your repayments.
After you have been approved for a payday or short-term loan, the lender will commence repayments usually on your next payday. Therefore, ensure your budget covers the repayment total.
it is easy to forget that you need to repay your short-term loan before your payments are due. If you can’t cover your monthly needs and the loan payment, explore other options. Before taking out a loan, you should always explore other options. These may include credit card 0% offers, balance transfers, or the help of friends or family.
Understand the downsides of fast approvals.
A general rule is that the best things come with caveats. Fast credit is expensive credit. There are plenty of quick short-term loan options that can get you to cash in hand within just a few days. This may be beneficial to you, and that is fine. However, they may come with higher rates. Some short-term loans with high APRs can significantly impact your total cost of borrowing. Ensure you get the deal that is right for your circumstances.
