Almost everybody has experienced that sinking feeling as pay day floats on a distant horizon and one more bill lands on a doormat much closer to home. With full countries experiencing difficulties in paying the gas and electricity bill, the public sector wage bill and the multi-trillion overdraft, you are certainly not alone; but it may actually feel like this. One hugely popular response to the discrepancy between the final demand date and pay day, is the near term loan. State and charity organisations have given plenty of the firms offering this kind of loan a coarse time, but the basic rule of 'you shouldn't borrow at a million % interest ' is easy for experts and consultants to say when they have heating, lighting and a hot meal to return home to. So should you or should you not?
The short answer and its longer cousin
The short answer is that you shouldn't, naturally. The alternative answer is that from time to time you may have to. Borrowing from "pay day" loan corporations, who choose to be known as "short term loan" firms, is risky business. Nevertheless it can depend on who you borrow from and how reasonably you manage your debt. The essential rules are that if you are certain your wages will arrive on time and you are certain you can pay back on time then it could be an option to borrow.
Counting the costs*
Of the many firms who offer this type of loan Wonga is one company that has received some positive press and recognition for its openness and honesty. Currently the APR (annual rate) on their short term loans is an imaginative 4214 pc; the company are not shy about this and you don't have to spend years trawling their website to find it displayed. The grim reality of repayments relies upon the term of the loan, and the best way to employ the loans is by borrowing the smallest amount possible for the shortest duration. As examples, $30 today will cost $9 if you borrow it for ten days ($39.00 to reimburse in total); $100 will cost $15.91 ($115.91 to reimburse) for a similar period. Wonga also supply a clear clarification of what will occur if things go bad; they're going to charge a delinquent payment fee of $20.00, but unlike most banks they'll only charge this once, although interest will be applied to your account for as much as 60 days. If things go bad they will discuss the difficulty and try their hardest to come to a solution for both of you. On the upside the company is amongst the few that don't charge an early repayment charge, so that you can clear your debt earlier than expected at no extra cost.
Alternatives and last resorts
The near term loan should ideally be viewed as just that; something to get you through for decisive necessities in the very short term. As an alternative you should also contact your creditor, to determine if they are going to be content to delay a payment - this is particularly important with utility companies as their regulators take highly dim perspectives of companies happy to cut off shoppers who are experiencing short term difficulties. If all else fails then a temporary loan might be a short term solution; just make absolutely sure it remains short term and a last resort. Creditors are often always open and beneficial if you simply call them and let them know you are struggling to make ends meet. Many firms will make an effort to help you resolve the difficulty by working in your finance limits, so always opt for that option before turning to a pay day advance.
*Figures quoted correct as of 03 September 2012
Cash Saving Spy is your 1 stop shop for the best deals online including, promo codes, free delivery offers and the most recent freebie giveaway promotions. We also write regular money saving articles which are practical and packed with common-sense!
The short answer and its longer cousin
The short answer is that you shouldn't, naturally. The alternative answer is that from time to time you may have to. Borrowing from "pay day" loan corporations, who choose to be known as "short term loan" firms, is risky business. Nevertheless it can depend on who you borrow from and how reasonably you manage your debt. The essential rules are that if you are certain your wages will arrive on time and you are certain you can pay back on time then it could be an option to borrow.
Counting the costs*
Of the many firms who offer this type of loan Wonga is one company that has received some positive press and recognition for its openness and honesty. Currently the APR (annual rate) on their short term loans is an imaginative 4214 pc; the company are not shy about this and you don't have to spend years trawling their website to find it displayed. The grim reality of repayments relies upon the term of the loan, and the best way to employ the loans is by borrowing the smallest amount possible for the shortest duration. As examples, $30 today will cost $9 if you borrow it for ten days ($39.00 to reimburse in total); $100 will cost $15.91 ($115.91 to reimburse) for a similar period. Wonga also supply a clear clarification of what will occur if things go bad; they're going to charge a delinquent payment fee of $20.00, but unlike most banks they'll only charge this once, although interest will be applied to your account for as much as 60 days. If things go bad they will discuss the difficulty and try their hardest to come to a solution for both of you. On the upside the company is amongst the few that don't charge an early repayment charge, so that you can clear your debt earlier than expected at no extra cost.
Alternatives and last resorts
The near term loan should ideally be viewed as just that; something to get you through for decisive necessities in the very short term. As an alternative you should also contact your creditor, to determine if they are going to be content to delay a payment - this is particularly important with utility companies as their regulators take highly dim perspectives of companies happy to cut off shoppers who are experiencing short term difficulties. If all else fails then a temporary loan might be a short term solution; just make absolutely sure it remains short term and a last resort. Creditors are often always open and beneficial if you simply call them and let them know you are struggling to make ends meet. Many firms will make an effort to help you resolve the difficulty by working in your finance limits, so always opt for that option before turning to a pay day advance.
*Figures quoted correct as of 03 September 2012
Cash Saving Spy is your 1 stop shop for the best deals online including, promo codes, free delivery offers and the most recent freebie giveaway promotions. We also write regular money saving articles which are practical and packed with common-sense!
About the Author:
Sharon Lum is a consultant for foreigner loan Singapore, and have massive experience dealing with folks of all nationalities in money wants
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