Though most of us try to live within our means, occasionally there are some expenses you just can’t budget for. From car repairs to home maintenance costs and Christmas presents to holiday down payments, sometimes the monthly pay check just won’t stretch quite far enough.
In times like these, short term financial solutions can help. Giving you the funds you need to cover your urgent costs and keep you afloat, products like personal loans and credit cards can make life a lot easier. But which option is really best? should you be putting payments on plastic or applying for a short term loan? Keep reading to find out.
How much can you borrow?
The amount you can borrow on a credit card or cash advance loan will depend on your individual circumstances. If you have an existing credit card, check your limit to see how much credit you have available. If you need more, you can apply to your bank to raise the limit, but there are no guarantees they’ll agree.
Personal loans are designed to be short term solutions and so are generally relatively small values. Loans are often around the $1,000 mark, with many people borrowing even less. Larger loans may be available, but again it depends on your personal circumstances.
In both cases, the amount you pay will depend on how much you borrow and how long it takes you to repay the loan. Some credit cards offer 0% interest for the first few months, however this will go up quickly once the special offer has expired. If you’ve managed to get a credit card with a low interest period, this could be a good short term solution. However, it’s important to check the small print as rates can go up fast.
Personal loans are often subject to higher levels of annual interest. However, as they’re designed to be repaid quickly, the cost of the loan shouldn’t be too high. As with credit cards, payday loans can be subject to fines if you miss payments, so make sure you stick to your repayment schedule.
When do you need to pay the money back?
When you take out a personal loan, you’ll be given a repayment schedule by your loan provider. This will tell you exactly how much you need to pay back and when you need to make the payments, making it easy to repay your loan quickly and efficiently. A credit card however has now fixed payment schedule. If you’re not careful, your credit card debt could quickly build up, dragging what should have been a short term solution out into long term debt.
The financial solution you choose will depend on your individual circumstances. However, with personal loans offering fixed repayment schedules and flexible loan amounts, they’re often more suitable for borrowers who want to make urgent payments without racking up long term credit card debt.
To find out more, or to apply for a short term loan, explore our website today.