Need a small amount of money in a hurry but you’re not sure where to get it from? 786 Loans specialises in both payday loans and short-term loans but they’re by far from the only options available to you. Taking charge of your finances and control of your money is all about considering the choices that are open to you and then making the right decision for you and your personal circumstances.
In this article, we look at:
- payday loans
- short-term loans (sometimes called instalment loans)
- guarantor loans
- logbook loans
- doorstep loans
- a loan from your boss
- money transfer from your credit card
- overdraft extension
- pawnbroker loan
- a loan from friends and family
- how to apply for a payday loan or a short-term loan through 786 Loans
Payday loans have been offered in Britain for decades – before the internet, people use to take out payday loans in “cheque cashing” shops, some of which still survive today.
The principle behind them is simple – you take out a certain amount of money in the form of a loan and you pay it back (plus the interest) all in one go when you get your next wage cheque. There are dozens of online payday loan companies in the UK helping people with bad credit histories access between £50 and £1,000.
Short-term loans have become really big in the last few years as payday lenders began to respond to requests from borrowers to give them more time to pay their loan back. For some borrowers, paying everything back all in one go really stretched their finance and, by paying back over a longer period, some of the financial pressure they feel would be reduced.
Short-term loans are generally for between £250 and £2,500 with up to 12 monthly payments. Please bear in mind that even though the monthly repayments are lower with a short-term loan than the one-off payment you make on a payday loan, you do pay more in interest over the term of a short-term loan than you do with a payday loan.
Payday loans and short-term loans are sometimes called “High-cost Short-term Credit” (HCSTC) loans. If your payday loan or short-term loan qualifies as an HCSTC product, you’re entitled to certain legal protections that you won’t benefit from with the other types of finance described on this page.
Those benefits are that:
- you won’t pay more than 80p per day in interest for every £100 you borrow
- if you miss a repayment, your lender can not charge you more than £15 in default fees
- over the term of a loan, the amount you pay in interest and in default fees cannot be greater than the amount you borrowed in the first place.
With payday loans and short-term loans, you don’t need a guarantor. A guarantor is someone who promises to pay back the money you borrow if you can’t make the repayments. Guarantor loans have become an increasingly larger part of the British finance market in the last 5 years.
It works like this – you find someone with a brilliant credit history whose earning a decent amount of money at the moment. You take out a loan at nearly 50% APR and if for whatever reason, you can’t make the repayments, the guarantor loan company will hound the guarantor to get them to pay the money back on your behalf.
It’s not a very good deal for your guarantor – is it? And things can get even worse if your guarantor is an important friend or family member. Nothing divides people like disagreements over money – in fact, it’s often cited in court cases as the main reason that so many people get divorced here in Britain.
We don’t believe in guarantor loans here at 786 Loans. We strongly recommend that you apply for credit yourself because there are now so many lenders dedicated to working with borrowers no matter how good or bad their credit history.
Guarantor loans also aren’t covered by the HCSTC regulations either meaning that you and your guarantor are arguably less protected. Debt charities are not happy with guarantor loans either as you can read in this article from The Times.
Logbook loans aren’t covered by the HCSTC regulations either. A logbook loan is a loan taken out against your car – except that when you take out a logbook loan, it’s not your car anymore. One of the conditions of signing up for an expensive logbook loan (50% APR is not untypical) is that you give up ownership of your car and the logbook loan company allows you to use it as long as you are making repayments. When the loan is fully repaid, that’s when you get ownership of your car back.
You can usually borrow up to 70% of the value of your car with a logbook loan however the Citizens Advice Bureau have warned consumers against using them – check out the BBC’s coverage of that warning.
Doorstep loans are a type of short-term loan primarily designed for borrowers who don’t have access to a bank account. Interest rates on doorstep loans are similar to the interest rates on payday loans and short-term loans. When you borrow from a doorstep loan company, you are generally paid the loan in cash and you have to make weekly repayments back one of their agents in cash. They are called doorstep loans because loans are agreed on a borrower’s doorstep and repayments are collected from the same place.
Always make sure that your doorstep loan lender is registered with the Financial Conduct Authority. Even though doorstep loans don’t qualify for the extra protection you benefit from on HCSTC loans, anyone offering you money on your doorstep without being registered with the FCA may well be a loan shark.
Credit card money transfer
If you have credit cards, you’ll be familiar with two terms – “balance” and “limit”.
Your limit is the maximum amount of debt you’re allowed to have on a card at any one time. Your balance is the actual amount of debt you have on your card. If your balance is less than your limit, you may be able to arrange a credit card money transfer – that’s where you transfer a sum of money up to the amount that takes you up to your limit. They’re sometimes called “cash advances”.
If your balance is close to your limit, many credit card companies allow you to apply to increase your limit online although the answer is not always instantaneous – that’s not handy for you if you’re in a hurry to get your hands on extra money.
You’re normally charged a fee for the money transfer – between 2% and 5% of the money you actually transfer – and then you pay interest on the transfer until you’ve repaid the money transfer in full.
Just as with credit card money transfers, your overdraft also has a balance and a limit.
If you’re running your balance close to your limit, you can apply online and in branch for an overdraft extension. Many banks will give you an instant answer but, with others, you may have to wait a day or two. If you need the money straight away, waiting around for it may not be suitable for you.
If you do extend your overdraft, you may have to pay a top-up annual fee to reflect the higher limit. Be careful not to spend past your new overdraft limit because that can give rise to a whole new set of charges, many of which may be banned soon.
There are thousands of pawnbroker shops in the UK offering loans to people but there’s a catch. In order to take out a loan from a pawnbroker, you have to give them something of value that they use as security against the loan. That could be jewellery, white goods, a big TV, or something else – you normally will be offered up to 75% of what the pawnbroker thinks the security is actually worth.
You agree to a repayment plan with your pawnbroker and, once you’ve made the final repayment, you then get your security back. However, if you are unable to pay back the loan, you’ll not only lose the repayments you’ve already made back to the pawnbroker – you’ll also lose your valuable item.
Speak to your boss
Do you have a good relationship with your boss? You might want to ask him or her for an advance against your future wages. Many employers run interest-free loan schemes to help their staff out when they hit financial trouble. If your boss is amenable, you’ll normally repay the loan in instalments with each repayment deducted automatically for your wages while you’re paying your employer back.
Another option is to ask your boss for more overtime or for a pay rise. Ultimately, you know how your boss views you and the contribution you make to the business – use that knowledge to decide for yourself which is the best approach for you which does not damage your working relationship.
Friends and family
Last but not least – your friends and family. Friends and family members will always want to lend you money if they have it available and most of them would not charge you interest on their loan to you.
However, please do be careful. As we covered in the part of this article about how money can really mess up relationships with friends and family members, you do risk doing your relationship a lot of damage if you keep missing agreed repayment dates. That risk can be even greater if your friend or family member finds themselves in financial difficulty because they did not get the money back from you that they were expecting.
Payday loans and short-term loans through 786 Loans
If the boss is not an option and your friends and family members don’t have any money to spare, there are plenty of options available to you. They all have their positives and negatives and the 786 Loans team would always ask you to ask yourself whether you actually need to borrow any money in the first place. If you do, then it’s important that the choice of the type of loan you make is right for you.
It works with dozens of short-term loan and payday loan companies in the UK. We’re not a lender ourselves – we’re a broker. The service we provide is to match up the right borrower with the right lender. We don’t waste your time or their time putting your loan request through to the lender who wouldn’t be able to work with you.
Once you’ve filled in your details, we send them to the best-suited lenders together with your credit report. Within seconds, we’ll get back a “yes” or a “no” from each lender – there might be one lender or ten lenders. When we’ve got all the “yes” answers back, then we’ll show you the best deal we’ve found together with information on how much your repayments will be and when the lender will collect them.
If you like the deal we’ve found you, you can use our online acceptance form to proceed. When you do, a new relationship between you and your lender will be created. We don’t charge a penny for our service and you’re not obligated to accept any offer we present you with.
To start your application, please click here.