How do you pay your bills, mortgage and rent? Do you often turn towards personal loans to repay bills that are overdue and are hitting your credit score? This blog will help you understand why an increasing number of Britons are turning towards these loans for their financial remedy and why and how it should be prevented.
The UK has witnessed a boom in the lending market over the recent years, with borrowing level at its peak since the financial crisis of 2008. When it comes to borrowing, there are 2 major types of debt:
Usually, secured loans are linked to assets – which serve as collateral for availing the loan. Whereas, an unsecured loan is not linked to any asset and that is the reason these debts are also known as High-cost Short-term Credit. Because the rate of interest charged by the lenders for this type of debt is generally higher.
A quick loan is an ideal solution if you face an emergency and need money to cover for the expenses that you didn’t plan or budget. These loans are a type of unsecured personal loans that have to be repaid within 12 months. However, due to the flexibility and convenience offered by these credit products, more and more people are using this loan to pay off their priority bills in the UK.
The most significant factor that helps to build your creditworthiness is timely repayments. Making a payment that is less than the minimum amount will probably affect your credit score negatively. To maintain your score, you need to be regular with your repayments of – credit cards, loans, mortgages, and every other bill – which if unpaid, may hit your credit report.
How Beneficial it is to Pay Off Bills Using a Personal Loan?
If you face difficulty in making the repayments of your bills, quick loans available online can help you. You may avail these loans within minutes if your loan application gets accepted. The complete process is carried out online and hence, you do not have to step outside the comfort of your home to gain access to funds – which may help you financially.
The cost of repayment of this loan can be spread across 12 months. That means you have the flexibility to choose your loan amount and loan tenure. Listed below are some of the benefits that a borrower may gain:
- Fast: Availing a personal loan is comparatively faster than any other line of credit.
- No Collateral: One doesn’t have to provide any collateral or any guarantor for availing this loan. Hence, there is no risk of any collateral damage.
- Simple: The application form is designed in a simple and easy manner for the convenience of the borrowers.
- Affordable: The rate of interest on these loans may vary from lender to lender. You may explore various credit brokers and lenders to find the rate that suits you the most.
If you have an excellent credit score, you may qualify for a loan with a low rate of interest – that could tone down your monthly repayment amount. This will help you to make the payments on time every month, without any fail.
The Ultimate Need for an Emergency Fund
The concept of building your own safety net becomes quintessential. It feels safe to have an emergency fund that may help us sail smoothly through the uncertain times. Saving money will not only help you in dealing with situations, but it will strengthen your financial backbone as well.
Your savings or an emergency fund can protect you against all the unforeseen expenses that you may bump into. Another great reason for building such a fund is that – it lowers your debt! Every time you face a problem, you do not have to opt for a quick cash loan. You can easily spend the money you had tucked away for the rainy days and start building your net once again!
Are You Struggling to Pay Off your Bills?
If you really struggle hard enough just make ends meet, then its high time for you to pull up your socks. Know what is holding you back from budgeting? Take a pen and a paper, note down your income and expenses. Categorise your expenses from most important to least – to know where your money is going?
Avoid unnecessary expenses and if possible cut down your expenses from each category. Prepare a budget planner before the commencement of a new week and stick to it so that you can afford to pay your priority bills.
Choose 786 Loans for Easy Application
786 Loans is an FCA registered credit broker that operates across the major cities in the United Kingdom. The application form designed is simple to use and it may only take up to a few minutes for the loan to get disbursed by the lender if your application gets accepted.