There are times when a poor credit score can impair the chances of getting a loan from the bank or acredit card company. This can prove to be a challenge especially when there is a financial emergency or crisis on hand and money is required. Getting a loan from a bank or credit card company is subject to the credit rating of an individual and low credit scores impact the approval rates considerably. In such a dire situation, it becomes imperative to have access to an alternate source of income or finance.
In fact this is exactly what a survey conducted by one of the leading payday loan companies found with respondents having to resort to payday loans in the event of a financial emergency. According to the wonga website survey statistics show the main areas where payday loans were applied are in the payment of excess utility bills, medical expenses, tuition fees, car repairs etc.
The BBC recently released a payday loan Q&A article, stating that payday loan lender services are not be obtained for non-emergency payments, or as a supplemental source of finance for home expenses. The fact is, a large percentage of consumers have had a fair bit of success in using them effectively to meet any financial exigencies that arise, without incurring any extra expenses. In a situation where credit scores are not too attractive, with no other options the only available source of help are short term or payday loans. All it takes is having a positive financial attitude towards paying up the loan at the earliest.
Most people go through a financial crunch at some time or the other and you must be sure of taking prudent measures to resolve it rather than ignoring the situation.
There are quite a few individuals who have overused their credit cards, which have led to them having to make use of payday loans. Using credit cards to make purchases are fine as long as it is done in an organised manner while keeping track of your spending habits.
Issues arise when credit card repayments are not made on schedule and additional charges are incurred.
Neglecting to keep up with credit card payments are one of the primary reasons for most borrower’s financial woes. The greater the increase in debt, the lower will credit scores dip and this will lead to a lesser probability of getting a loan from standard lending institutions.
Suited for those with no or minimal savings
For those individuals who do not have adequate savings to help out with any unexpected money emergencies, direct payday loans work perfectly for them. All it takes is to stick to the payoff schedule to solve any financial issues that pop-up unexpectedly. Those who are credit card users can keep one card aside for financial emergencies. The only problem is that it has been found that impulsive credit card users tend to use whatever cards they have at their disposal; when they have third party funds at their disposal on account of having a longer repayment schedule. In such a situation, it is best to have access to short term loans that generally have to be paid back within a span of a fortnight.
The key to using short term loans successfully is using it only when in extreme need and ensuring thatthe repayment schedule is adhered to strictly. Defaulting on the arranged payment date will only incur additional charges which can be very expensive. All it takes is a bit of planning and having a clear understanding of how they work. Payday loan companies may differ in policies so a lender has to ensure that he has understood the terms and conditions and if in any doubt, ask for clarifications from the company.
The biggest advantage with short term loans is that they are for small sums of money, generally between £100 – £400 and they can be repaid fairly easily, if you divvy up your expenses and borrow wisely. Short term loans are here to stay and their rise in popularity among different segments of society is ample proof of this.
Author Bio: The writer has dabbled in the short term loan industry for a fairly long period of time and has used the experience gained to guide those who are new to this area.