When is a Good Time to get a Loan?

A loan can come in handy for just about anything.

15:31 22 July 2021

From unplanned house maintenance to the car breaking down, sometimes turning to a short-term loan is the answer for a quick fix. It’s always a good idea to do some research before borrowing, as different companies have different terms and interest rates.

 

What is the difference between short-term, payday, and personal loans?

 

These types of loans are not earmarked for certain things (like a mortgage) and can be used for whatever purpose you need it for. A short-term loan usually has a short repayment period, typically 12 months and under whereas a personal loan usually has a borrowing period of 12 months and more. A payday loan is what it says on the tin, a loan before payday and is usually paid back within 30 days or less.

 

Best time for a loan?

 

There are many reasons as to why someone may need a loan. However, we’ve highlighted some below where a loan may be considered.

 

• Car breakdown or something needs fixing – maintaining a vehicle can be an expensive job and sometimes the unexpected can happen.
  
  
• Cover unexpected bills – whether it’s a bill you have missed or something in the house, like the boiler, needs fixing.
  
  
• Once in a lifetime trip – taking a loan out doesn’t always have to be for negative or unexpected reasons. Sometimes your backpacking holiday or cruise is costing a little more than expected.
  
  
• Christmas presents – it’s an expensive month for everybody and sometimes some extra money can go a long way.
  
  
• Wedding – planning a wedding is no cheap feat and sometimes you can go over budget for your dream wedding.

 

Things to remember

 

Most loan companies run a hard credit check which stays on your record for a period of time. If you have made multiple applications or have been rejected from a loan, this can affect your credit score in a negative way. However, it’s also handy to remember that if you repay your payments on time, this shows how reliable you are with borrowing money and can have a positive effect on your credit score.

 

Make sure you can comfortably pay back the amount you are borrowing. You do not want to over borrow and struggle with the repayments. Most loans tend to have a high interest rate which can be expensive if you miss a repayment. Be sure to do plenty of research on the company you wish to apply to for a loan. There are tools online that can help with comparing loans so you find the best one.