With Covid 19 causing devastation to the UK economy, many people are looking at ways to “make ends meet”, This is especially difficult with a poor credit score. Short term borrowing such as payday advances can cause more problems than they solve. Do short term loans help bad credit?
It may be tempting for anyone with bad credit problems to think that a short term loan is an answer. After all, they are available for people who would find it difficult or even impossible to find an alternative solution. However, but they are fraught with danger. The major problem with short term lending is it can be very expensive. It is typically is only designed for one or two months. If you keep rolling over the debt, it can get very expensive, and a major burden.
A short term loan is designed to bridge a gap, and a date will be set at the beginning of the loan. This date is when it will need to be paid back in full. This will usually be your next payday, hence the often alternative name of payday loans. The real problem can start if you fail to meet the repayment schedule. In this situation, and interest plus other charges can soon escalate out of control.
It is pretty easy to get into the desperation borrowing cycle which can be exceedingly difficult to get out of and you can find yourself spiralling further out of control and into a sea of debt.
If you can somehow avoid using short term loans, there are alternative longer term solutions to consider:
– Building your credit score. This will give you access to cheaper loans, a larger overdraft, and a facility on your credit card.
– Longer more affordable loans. Where the interest rates are lower and the monthly repayments can be more affordable.