Very few of us can get through life without getting involved in some kind of loan application process.  Even if we don’t want to borrow money, it is more or less forced upon us if we want to buy a home.  But when it comes to borrowing smaller sums of money, there are several alternatives.  But before you decide which the best one for you is, consider your financial position and your circumstances.  It is not always the traditional ways of borrowing which are the best.

With a payday loan you are not just talking about a lesser period of borrowing but also a much faster processing time.  Long terms loans (mortgages, personal loans) can take weeks to process and intense credit checks.  Because payday loans do not involve the same type of credit checks, they may be easier to obtain if your credit is less than perfect. 

Companies like wonga offer a short term loan which is simple to obtain via a very user friendly website.  These types of loans are also a good alternative to using credit cards or bank overdrafts as the repayment date is set when you take out the cash advance.    Referring to these types of loans as payday loans is actually misleading.  A payday loan implies borrowing against your salary and some companies do this by taking post-dated cheques etc. to guarantee the loan.  A loan from wonga does not work in this way.  They check your details online and within minutes the money can be in your chosen account.  You then just have to pay it back, in full, on the chosen date.

But under what circumstances might a short term loan be useful?  Basically any situation where you have run out of funds and need money in an emergency.  Imagine the nightmare scenario that you are unable to pay the monthly repayment which is due on a long term loan like a mortgage. Missing this payment will not only cost you interest charges and fees but will immediately impact upon your credit file, giving you a black mark going forward.  And once you have a black mark on there, it is not that easy to get rid of.  Using a short term loan in these circumstances enables you to make the repayment, thereby preserving your prising credit history and without costing you a fortune in interest charges.  You simple pay back the money as soon as you have cash available, which has to be within a month or less. 

So there are plenty of alternatives to the unfortunately labelled ‘payday loan’.  A simple search online will give you plenty of options and it is up to you to choose carefully and only deal with the reputable, well known, branded companies.

Borrow in haste, repent at leisure so the old saying goes.  But this does not have to be the case if you research your chosen method carefully and comply fully with the payback terms. 

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