There is now a selection of different short-term loans and they differ in several ways. Although the cost difference between the short-term loans could be something that might seem to be the most important factor when picking between them, the repayment term can be really important as well.
Short-term loans used to tend to come into the category of pay-day loans. This meant that you had to repay the entire loan on your next pay day. Although this was good because the loan was paid off quickly it meant that you had to find the large sum of money in one go and somehow manage for the rest of the month after paying off the loan. Therefore if you can spread the repayments over a series of months, such as 6 months, it can be easier to manage the repayments. Not only is it easier to find the money to cover the cost of the repayment but it is also easier to manage for the rest of the month as you are not having to pay out such a large amount of money.
However, you will usually find, with all loans, that you will pay more in costs if you repay it over a longer period. This could put some people off going for a loan with a longer repayment term. However, this is useful for those people who struggle to pay a larger amount back. It can be worth spending the extra money that a 6 month loan will cost if it means that you will find it easier to manage your money.
There is even a risk that if you have to repay in a lump sum or instalments that are too big that you will have to take out another loan in order to help you to manage until the end of the month, then you will have to pay out even more money and it could lead to a spiral of debt.
Representative Example: £400 borrowed for 90 days. Total amount repayable is £561.92 in 3 monthly instalments of £187.31. Interest charged is £161.92, interest rate 161.9% (variable). Representative 305.9% APR. We are a broker not a lender. We don't charge fees. We don't sell your personal information.
Of course, it is up to you whether you decide to go with a 6 month loan or a quicker one. You will need to think about how you will manage the repayments. Consider how much money you normally have available and whether you would have enough to pay off a big chunk of money as well. If you are not sure, then you should be able to calculate it.
Take a look at the amount of money that you have coming in on a typical month and your fixed expenses. These are the things that you have to pay regularly such as utilities, rent or mortgage, tax, any contracts or subscriptions and things like that. Then look at any extras that you also buy that you need, such as fuel or transport, food and things like that. You should then be able to work out how much you have left to cover the cost of a loan repayments.
If you want a 6 month loan, then you may wonder where to start looking for one. Mainstream short term lenders do not offer this sort of loan and so you will need to search among the short-term loans. This may be an area that is unfamiliar to you apart from a few advertisements and so you may wonder how you will actually look for the loan. Omacl can help you with this. If you let them know what you are looking for in a loan, the amount that you want to borrow and how long for, they will send your details to lenders and let you know who will be prepared to lend to you.
This will help you to see which lenders you have to choose from and should introduce you to lenders that you had not heard of before. Then you will be able to compare them and see which of them you think will be the best for you. If they all offer 6 month loans then you will be able to compare them on other factors such as the price and the reputation of the company and this will enable you to be able to choose the one that you think looks the most suitable for you.