Should I use Savings or Payday Loans?

We all have to make financial decisions and some of them are easier than others. We might be choosing between a branded item or own brand in the supermarket, deciding whether to buy insurance or wondering whether to save up for something or borrow the money. These decisions can sometimes be really hard and it can be worth thinking about what you might want at the current time as well as in the future as this should help you.

Advantages of keeping savings

It can be difficult to build up savings and so we tend to want to keep hold of them. It might be that we save a certain amount each month so that we can build up a good amount. It might be that we put in a lump sum, perhaps form a gift or inheritance and want to use it for something special. Therefore, the money might have a special value for us and we therefore would want to keep it to spend on something really good.

We might want to keep the money for when we have a financial emergency and have no other way to pay for something. This might make us prefer to take out a loan if we can and use the money when we have no loan options left. It might make us feel more secure that way.

We might be saving up for something specific and might feel that if we use that money then we will not be able to buy that thing. Therefore, we can get attached to the feeling that the money is only for that purpose. For example, if we are saving up for a holiday, then we may worry that we will not be able to have that holiday if we spend the money on other things.

There is always the risk that if we start spending the money that we have saved, then we could end up spending more and more of it and then have nothing left. If you are worried about this then you will be justified in thinking that it will be better to keep the money in the savings and borrow.

Advantages of payday loans

Payday loans can be arranged really quickly and so if you do need the money fast you will have no need to dig into your savings in order to pay for the items that you need. They will also lend to people with a poor credit rating and so you will not need to worry about the results of a credit check when you are considering whether they are the right loan for you. As long as you are happy that you will be able to repay the loan, then any borrowing can be seen in a positive light. Of course, many people do borrow and do not check whether they can afford to repay and that is where problems can stem from.

Which to choose

It can be a very tricky decision to make but it is worth thinking about a few specific things.

  • Cost – It is worth calculating the cost of the two options and think about which appeals that way. You will find that if you add it up the loan will cost you more money than the lost interest on the savings. You will need to see whether you are happy paying out that extra money so that you can keep hold of your savings. Some people will be happy to do that and others would rather use their savings and then put the money back into their savings when they can afford it.
  • Convenience – it might be more convenient to get a loan if your savings are tied up. Some people have money in bonds or notice accounts and it can take time to get the money out. However, they will be able to get the money for the loan very quickly, perhaps even within a few hours. On the other hand, if the savings are in an instant access account then you might find it quicker to get hold of those than have to apply for a loan and wait for the money to come through.
  • Repayments – It is always important to make sure that you are confident that you will be able to repay the loan that you take out. This could be any type of loan and could be a series of repayments or in the case of a payday loan just the one. It is wise to take a close look at your finances to see whether you think that you will be able to afford this.
  • Future – it is also worth thinking about the future as well and what the consequences of either the loan or the lack of savings will have.

Advantages and Disadvantages of Short-Term Loans

There are many people that find it difficult to decide on whether taking out short-term loans will be a good thing for them or not. We are all different though and so we will find that there are different reasons that might work or may not work for us. It is therefore good to think about the advantages and disadvantages of the different types of loan and then you will be able to decide whether they will work for you. With short-term loans it is more likely that you may not know so much about them and so it could be harder to for a list. Therefore, there is one for you here.

Advantages of short-term loans

Short-term loans are usually available to many people. This means that even if you have a poor credit record, they are likely to still offer you some money. Many people feel that if they have a poor credit record there are no or very few borrowing opportunities available to them, but short-term loans will allow them to borrow money.

Short-term loans tend to be very quick to arrange as well. As long as you are quick at applying and provide all of the necessary information then you may be able to get your money within a few hours. This is a lot quicker than a standard loan and will mean that if you do have a financial emergency, you will be able to get money really quickly.

As the loans are short-term it will normally mean that the money will be repaid quickly. This is especially great for anyone that does not want a loan for very long. This could be because you have plans for the future for which you need to be debt free or because you do not like having loans and so relish the idea that you will be able to get rid of one quickly.

There are now different types of short-term loans. We tend to think of payday loans, but you do not have to repay in a lump sum any more you can get an instalment loan. You can also borrow larger amounts of money with a guarantor loan. You can even use your vehicle as collateral and get a logbook loan. There are now options which means that there should be a good choice for everyone.

Disadvantages of short-term loans

With all loans there will be a cost involved. This is because the lender wants compensating for lending you money but they also have to pay interest themselves as they borrow the money that they lend you and they will need to pay their staff and their other expenses as well. With short-term loans they are taking more of a risk as well. This is because they are lending to anyone, including those with a poor credit record. This means that they tend to be more expensive as they will take into account the risk that they are taking by lending to those that may not be able to repay on time. They will therefore charge a bit more.

Repaying any loan can sometimes be tricky and if you miss a repayment there will be an extra fee to pay. This means that you need to be really careful to make sure that you will be able to afford the repayments. The repayments will vary depending on the specific loan that you choose and so it is up to you to think about what you might be able to afford and choose a loan that will suit your budget.

Summary

Whether you feel a short-term loan is right for you will very much depend on your circumstances. It is good to be aware of what they are and how they work and then if you are looking for a loan you will be able to consider whether they are the right type of loan for you. If you have a poor credit rating or need a loan really quickly then they could be a good option for you, but you will need to be sure that you will be able to repay them as well. It is wise to do a lot of research, finding out about all of your options, so that you can make a well-informed decision before you borrow money from anywhere. You will find that all options that you look at will have advantages and disadvantages and it can be a good idea to think them through and this should help you to make sure that you are making the right decision for you. It is worth taking some time to do this as then you will know that you have invested in your decision and should not have anything to regret about it as you will know you opted for the best loan for you.