How a Personal Loan Could Help You During Hard Times

Borrowing money isn’t always such a good idea. But in some circumstances, taking out a personal loan can really help to get you out of a tight fix financially. We know that it’s not always easy to tell whether borrowing is the right thing to do. It’s a complicated thing, but there are some scenarios where same day personal loans, for example, can help you get through a tough time. 

When we talk about personal loans, we are talking about any consumer loan. This includes things like a bank loan, but it also includes online payday loans and other short-term loans. Basically, any loan that you take out yourself, as a consumer, rather than a business, is a personal loan. 

Most personal loans, as we generally regard them. Are unsecured loans. This means that you can borrow without offering up security, such as a property. This is why we tend to categorise mortgages separately to other personal loans, as mortgages are secured against the property you are buying.

Many of us rely on our cars every single day. Whether it’s ferrying the kids to school or classes, or getting to work and the shops, most people would struggle to lead a normal life without a vehicle. So what happens if your car suddenly needs emergency repairs and you have no spare cash? Or if your MOT uncovers some inconvenient problems that needs sorting right away, but you don’t have the funds to cover the cost? A short-term loan could be the solution you are looking for.  

Short-term loans are usually available online through specialist lenders. They provide you with a relatively small amount of money to cover emergency costs. Short-term loans are usually repayable over a few weeks or months. 

Payday loans tend to be repayable on your next payday, while other short-term loans, known as instalment loans, are more flexible and you can spread repayments over a number of months.

One of the main attractions of short-term online loans is the fact that you can often get the money in your bank on the same day that you apply. Applying is also super easy and quick and does not usually require you to fill in paperwork or send back documents through the post, for example. 

The amount, terms and rate you will be offered will depend on several factors, including the individual lender’s policies and your own credit record and status. 

Because short-term loans are pretty easy to come by online, interest rates can be very high when compared with other forms of longer-term loan. Lenders take a risk when providing funding to people who need emergency cash and they don’t actually legally need to check your credit history to lend to you. In exchange for taking these risks, lenders make money from interest charges, late payment penalties and other fees that might be payable, such as early repayment charges. 

Another situation where a personal loan could help you during financial hardship is in the case of a debt consolidation loan. These tend to take the form of slightly longer term personal loans that are tailored to an individual who needs to repay a number of other loans that are costing them a lot of money in interest. 

If you are in this situation, and you are struggling to service several high-cost loans, a single personal loan to repay all the smaller loans could work out cheaper and more straightforward to manage. Servicing a single loan can help you refocus your budget and ensure you don’t miss payments, which always end up costing you more. 

Before you take out a debt consolidation loan, remember that you could end up paying more in interest charges in total, as you may be borrowing the money over a longer period. However, providing it helps you to avoid missing repayments and being charged penalties, a consolidation loan could still be a sensible decision. Defaulting on loans also damages your credit rating, and protecting this is important for future credit needs.

Other situations where taking a loan might get you out of a tricky fix: