The unexpected can always happen. The children, the car, and other needs may come up outside our monthly budget. A payday or short-term loan often comes to the rescue.
Are you seeking a quick cash loan such as a ?500 Loan to meet an urgent need? There is no wrong in getting a loan if it serves the purpose for which the ?500 Loan is sought. But just before you jump right in to apply for the ?500 Loan, you should pause a bit and provide answers to some questions to guide you in the loan process.
If it?s certain you need the ?500 Loan, ask the following questions before you apply?
1. What Will This Loan Cost?
When shopping for the right loan, make sure that you make comparisons. The true cost of a loan reflects on the interest, fees and payment terms. Some banks claim that they offer their customers preferential rates, but you may find more cost-effective loans available elsewhere. For the ?500 Loan, fast loan companies over the internet are the most suitable place to take your comparison to.
2. What Will be the Interest Rate?
It is important to ask this question because the interest you will pay over the original loan will raise the loan amount considerably.
The interest amount you pay will depend on several factors like your income and the amount of your loan. Your credit score may also count to affect the interest rate. Lower rates can save you money over the period the loan lasts.
3. What default fees will you pay?
Also, know what happens if a payment is missed, any default penalties? Find out to see if you can comfortably pay off such fees if it eventually happens to be the case. The loan’s APR is the total interest rate and the initial charges of a borrower. Use this to compare the different costs of your various loan options.
4. What Are Your Loan Options?
For a ?500 Loan, you should think of options or other ways around the loan.
Whether you apply to a lender or how much you will have to borrow is not the only thing to worry about. You should weigh the different loan options. Do you know that there are various types of financing available, each of which has its pros and cons?
You may be considering a traditional bank for your loan because of the long cordial relationship you have built in the past with the company. That may not be what you need. A peer-to-peer loan option or even consulting with friends and family to loan you the money can save much money for you at the end of the day. As mentioned above, the online lending platforms are good for a short-term loan such as a ?500 Loan. Do you have better options?
Know how each loan type apply. Unsecured individual loans need no protection. The riskier they are for the loaner, the higher the interest rate, but in return, they are also easier to obtain loans from. So it’s important to ask yourself the best for you and choose the right one for your financial situation.
5. Are there any Charges on Early Payment?
Are you aware that some lending institutions charge you if you repay your ?500 Loan before the period agreed? This may sound strange but the lenders know why they do that. If the interest is spread across some months and you decide to escape that by paying off early, they miss out on the interest. They only way at their disposal is to charge some fees for that. At least this will prevent borrowers from repeating such actions.
Interest rates are essential, but they are not the only important considerations when applying for your ?500 Loan: there are often the hidden charges in prepayment
You should know what fees are payable, from late charges to refund penalties and others as applicable. Does the lender list its range of charges? Will you be hit with prepayment penalties?
When you think that you have a better chance of paying off your ?500 Loan quite early, it may be important to look for an offer with no early repayment fees of that will save you some money.
6. Do You Have the Resources to Payback?
It is one thing to acquire a ?500 Loan; another is to repay the loan as at the time required. What is the state of your finances? Have you any solid plan on how to repay the loan. If you are going to borrow ?500 Loan, how much can you afford to take out from your monthly income? Are you in any employment? If not, it might be a difficult one, where do you intend to get money to repay the ?500 Loan?
7. What will your Monthly Payment look like?
Although personal loans will provide cash for various needs, it is important to ensure that you only loan what you can realistically afford. Keep in mind, though, that your loan payment has several different factors. Not only will the amount that you borrow play a significant role, but your rate of interest and duration of the ?500 Loan will also affect your monthly payment.
Once you?re about to begin the application, sit down and check your finances. Check your budget and consider the repayment strategy. Would they take out a large chunk out of your finances? Have you considered how this may affect you? If it looks like a tough one, at this point, a ?500 Loan might not be your best choice.
8. How Long Will It Take to Payback?
It is another crucial question to know how long you are going to pay the loan, bearing in mind that some of this are your decision.
You may choose a shorter timeframe if you don’t mind paying a greater monthly payment. On the other hand, a ?500 Loan with an extended repayment schedule will help you obtain a lower monthly payment but this may also cost you more.
Don?t be in a hurry to take out a ?500 Loan when you need one. ask a few questions as suggested above to guide you right.