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What is the best way to borrow a small amount

What is the best way to borrow a small amount

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If you’re temporarily struggling financially, it can be a good idea to borrow what you need. While not getting a loan is always the best advice you can follow, there are times when they can prove to be useful.

At one time lenders would only lend thousands of pounds to borrowers. However, with the rise in popularity of payday loans, you’ll find a lot who are now willing to lend hundreds of pounds, rather than thousands. The only trouble is, they don’t often come with the best interest rates.

How quickly do you need the money?

The first thing you need to think about is how quickly you need financial help. The speed in which you receive the money after being accepted will vary between lenders. You’ll find the majority release the funds into your account within 3 days. However, there are some that take longer. So, if you are in a rush for the cash, you will want to make sure you check how quickly the lender pays out.

Consider a credit card

Credit cards haven’t always had the best reputation. However, they can be one of the cheapest ways to borrow a small amount of money. There are hundreds of credit cards out there and some have a significantly higher interest rate than others.

If you have bad credit you will struggle to get a good deal. However, it’s a great choice for those with average or good credit ratings. If you search for a card that also offers an interest free period, it makes this choice even more affordable.

Can you apply for an overdraft?

What is the best way to borrow a small amountMany current account holders can benefit from an overdraft. This basically allows you to go over your balance by an agreed amount set up with the bank. The limit will depend upon your individual circumstances. It is worth noting that interest on overdrafts is charged daily.

It is always a good idea to only choose this option if you plan on paying the money back quickly. The rates aren’t always cheaper than payday loans either so this is definitely something you need to look into.

Are payday loans a good option?

Payday loans have become the number one choice when it comes to short term loans. Many of them don’t carry out a credit check which makes them a popular choice for those with bad credit.

However, the interest rates are really high which won’t necessarily matter unless you fail to pay the loan back within the agreed amount of time. You usually have to pay them back within 30 days and they are paid back in full, rather than in instalments. Another benefit of this type of loan is the fact you can often get the money on the same day.

As you can see, you have a number of options when it comes to getting a small loan. Which one is right for you will depend upon your own personal situation. Compare all of your options before deciding which is best for you.



About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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