How to compare short-term loans online
With families struggling to make ends meet and access to traditional forms of credit drying up. More and more of us are turning to short-term loan lenders to help in times of financial crisis.
If you’re considering taking out a short-term loan, it’s essential to know what you’re applying for and if you are getting the best deal for your finances. Understanding how to compare short-term loans online is the best way to make the right choice.
To ensure that you take out the right short-term loan, you must compare which loan against others suits you best. To help you, MoneyHub aims to list all short-term loan companies must list their loans on loan comparison websites.
However, how do you compare short-term loans online?
MoneyHub has written a detailed guide on comparing short-term loans online as an alternative for loans and credit.
1. Is the short-term loan lender direct or indirect?
One of the most significant trends in the short-term loan industry has been the growth of indirect and direct lenders.
But what is the difference between a direct and indirect lender?
Direct Lenders
Direct lenders have received authorisation from the Financial Conduct Authority (FCA) to lend money directly to borrowers. Ranging from small, short-term loans of €500 to more substantial amounts of up to €10,000.
Traditionally, direct lenders wholly used to be banks. However, the influence of the internet and online browsing by consumers has led to an increase in reputable online lenders.
Indirect Lenders
An indirect lender acts as a referral service, obtaining a commission from the direct lender as payment for referring them.
Indirect lenders, whilst ultimately legal and reputable, will not be able to support you should you have any questions about your loan. For example, if you run into financial problems, an indirect lender cannot help you. Direct lenders have customer service representatives who can be contacted if borrowers need a solution to their financial problems.
2. Examine the eligibility criteria
Every lender has different acceptance criteria, with some lenders willing to lend to borrowers that others wouldn’t be able to offer a loan to.
These criteria can include:
- Age
- Type of job
- Monthly income
- Debit card details
- Outstanding loans
- The amount you wish to borrow
Although not an exhaustive list, as each lender has unique eligibility, always consider whether you can meet these criteria before applying to avoid disappointment.
3. Does the short-term loan lender offer multiple repayment options?
As a borrower, you must have access to multiple repayment options that best suit your budget and ability to repay your loan. Not all short-term loan lenders offer multiple repayment options.
Multiple repayments ease the financial burden on borrowers and make it more straightforward should they require additional repeat borrowing.
4. Search for short-term lenders that are right for you
Today, it is even easier to find a suitable short-term loan listed on a comparison website. Comparison websites like MoneyHub can demonstrate the loan cost, the repayment options, how much the repayments are, and how much the loan will cost once you have fully repaid the amount.
5. Discover the various types of short-term loans available
Online comparison websites can educate you about the different loan types you can apply for. Applicants with a poor credit history can apply for bad credit loans to return to a solid financial foundation (if they repay on time as per the terms of their loan).
Instalment loans are becoming more popular for those applicants who wish to repay smaller amounts over a more extended period, thus helping them manage their financial budget.
Using a comparison website is one method of searching for the right loan for your needs.
6. Choose a loan with a low APR
Annual Percentage Rate (APR) is the interest rate you repay on top of your borrowed loan amount. If you want to boost your credit rating yet still require cash, choose loans with low-interest rates.
The amount you can borrow will be limited; however, the subsequent experience of borrowing and repaying on time will build your creditworthiness.
Finding a low APR rate can be challenging, but possible if you use a short-term loan comparison website.
7. Choose a loan that pays funds immediately
Short-term loans should only be used in times of emergency. Hence, once a short-term loan has been granted, borrowers need to know when they will receive their emergency funds.
Several lenders send the money instantly on the same day as the application, whilst other lenders can take longer to process loans to applicants.
Thus, find a suitable short-term loan lender that instantly pays out your emergency funds. Online short-term loan lenders are the best for this.
Conclusion
To correctly compare short-term loans online, borrowers must search and read all the information about the potential loans offered.
When applying for a short-term loan, always check the following details to ensure you borrow from a trusted provider.
This includes:
- Loan amount
- The APR
- The total amount you will repay
- The repayment terms
In doing so, it puts you, the borrower, in control of your finances, providing access to much-needed credit and connecting you with short-term loan direct lenders that you can trust.If you apply for a short-term loan, think carefully before you submit your application and make sure that you can pay the debt on time.