- Overdrafts – This is an extension or safety net to your bank accounts current account. Overdrafts are ideal for a shorter period of time where you need to cover imminent bills but have no immediate funds. Interest rates can be higher so an overdraft is not the best option for longer term loans. If you plan ahead then you can set-up an overdraft as a convenient way to borrow money fast when an unexpected bill arrises.
- Loans – Loans are a preferred method of borrowing money for a longer time period. A loan can be secured, which means the lender has the right to sell one of your assets (typically your home) if you don’t keep up your payments. An unsecured loan is more risky for the lender and will mean that you will end up paying a higher interest rate.
- Credit Cards – Credit cards can be useful for short term debts where you are able to repay the full balance within a month. If you don’t repay the full balance then you will pay large amounts of interest. The Annual Percentage Rate (APR) can be very high and debt can quickly spiral if you are not careful. While not the cheapest form of borrowing money, a credit card is a useful way to borrow money fast and can also offer some protection from the credit card company themselves.
- Budget Planning – The Financial Services Authority (FSA) has provided an online budget planner so you can check your income against your expected outgoings. This is a great way of checking whether you can afford to borrow money online.
- Debt Test – If you already have debts in the form of a mortgage, loans or credit cards then you should be careful about taking on more debt. This Debt Test will give you tips about avoiding unnecessary debt, help you ascertain how much you should borrow and help you tackle any debt problems.
- An installment loan is a loan that is repaid over time with a set number of scheduled payments. (Source: https://en.wikipedia.org/wiki/Installment_loan)
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