The lowdown on same day loans
Cash in your bank account within a day can seem like an attractive prospect but what should you know before applying for a same day loan? Our guide will help you make the right choice.
Most of us will know how it feels to be a bit short of cash for an unexpected bill. If your car needs fixing or your boiler has packed in, you may need access to cash right away. In situations like these, you have the option to apply for a same day loan.
Here, we’ll look at same day loans in more detail and find out what they are and whether they offer a decent deal to borrowers.
What are same day loans?
Technically, many types of loans can be accessed within 24 hours. However, the term of ‘Same Day’ loans is most commonly associated with short-term loans that are offered through an online ‘pay day’ loan providers. Many of these lenders will send cash to your bank account almost immediately after you are approved for a loan, hence the name ‘same day loans.’
Although it is tempting to take out a loan that delivers cash right away, it’s important that you take your financial circumstances into consideration and only take out loans you can afford to repay within the term of the deal.
When might a same day loan be useful?
If you need some cash quickly because you have an unexpected expense, such as a utility bill or an urgent repair, and you don’t have the cash available right now - but will in the near future - a same day loan may be able to help you out.
If you decide to opt for this route, you can compare same day loans online for various deals offered by lenders.
Things to consider before taking out a same day loan:
- How much you need to borrow: Think about the minimum you can get by on and only borrow the amount you actually need, never more.
- Whether you will be able to repay the debt in full within the timeframe offered: This is very important as the debt can quickly spiral if you fail to repay within the initial term.
- What interest you will be expected to pay on the amount you borrow: When you take the interest charges into account, you will end up paying more back than you initially borrowed, so make sure you can afford this as short term loan rates tend to be higher than other types of borrowing.
- Charges and penalties: Are there any charges, fees or penalties payable on the loan?
What are the alternatives to payday loans?
If you need same day cash, it might be worth ringing your bank, who may be able to set up an immediate-access arranged overdraft on your current account. Borrowing through an overdraft facility, providing you stay within your agreed limit, can be a far cheaper way to access same day cash than taking out a payday loan, for example.
Lines of credit
There are various providers of lines of credit on the market including those that offer same day loans via an online application. Lines of credit involve applying for a maximum loan amount with the ability to down any amount up to the limit over an agreed period of time. You usually only pay interest on the amount you actually draw down so this can be a way of keeping the costs down.
There are circumstances where borrowing on a credit card will be cheaper than borrowing through a same day loan provider. Providing you have a decent credit score you may be able to apply for a credit card to use in emergencies. It’s then sensible to repay the full amount owed each month to ensure you minimise the cost of borrowing.
What should I be aware of when taking out a same day loan?
It’s important to check the interest charges payable on the loan you are considering. Take time to research the various same day loan options to find the cheapest deal that suits your situation and your requirements. Look for the APR advertised against the loan and bear in mind that you may have to pay higher interest charges than the APR if it is stated as being ‘representative’.
Take care to ensure that you will be able to repay the loan within the allotted term of the loan as charges can be payable if you miss the deadline. Your credit score may also be affected.
And finally, never take out a further payday loan to pay off an existing one as the debt will quickly mount up. If you are struggling to pay debts it’s always a good idea to seek advice from an accredited source. You can also contact your creditors to inform them that you are having trouble meeting payments and see if they can help you.
Jim brings together unique data insights, contextual knowledge and thought provoking themes, to shed new light on important issues affecting both UK businesses and individuals. Read more