It can be difficult to budget for every single cost that life throws at you. Whether you need to replace the washing machine, fix the car or have been hit with a utility bill that was bigger than you had anticipated, a 6 month short term loan could allow you to spread the payment. Unlike a traditional “payday” loan, repaid in one lump sum on your payday, these loans give you longer to sort out your financial situation by breaking repayment down into smaller instalments. Crucially, however, spreading repayment means paying more overall for a loan, so if you can possibly pay off the debt sooner, you should.
The good news is that you can often have your funds transferred the same day that you apply. The bad news is that high-cost, short-term credit involves extremely high interest rates, and being charged such high interest rates for six months makes these a very expensive credit option. There are alternatives. Before you take out a 6 month loan, learn about alternative options at moneyadviceservice.org.uk.
If you have decided on a six-month loan, however, it’s vital that you compare rates from multiple lenders. While most payday lenders charge very similar rates for loan terms of one or 2 months, there is more variation and competition for 6 month loan terms.
Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk.
Please note: High-cost short-term credit is unsuitable for sustained borrowing over long periods and would be expensive as a means of longer-term borrowing.
You can use the tool below to get an idea of how much the loan that you have in mind would cost each month and overall, from a range of popular payday/short term lenders.
Unlike payday loans, unsecured 6 month personal loans are actually available from some of the big high street banks. It’s also possible to get a credit card with low or no interest on purchases for a set number of months. Although they may involve a longer application process, and stricter eligibility criteria, these options could be cheaper than a 6 month loan from a payday/short term lender.
Before applying for a payday/short term loan you should always consider other options. Is the expenditure that you’re planning absolutely essential? If possible you should defer your purchases as this will save you money in the long run. If you need the money to pay for a bill, it’s always worth speaking to your provider to see if you can organise a payment plan or defer your payment. Read more about alternatives to payday loans at moneyadviceservice.org.uk.
Payday/short term loans are a high interest form of borrowing designed to help you overcome a temporary shortage in cash. Typically you will be expected to make monthly repayments, however it is possible with some lenders to pay back your loan weekly (or in a few cases, fortnightly). As a general rule of thumb, making repayments more often means that a loan will cost less overall. That may not be the case, however, if a lender charges different interest rates for loans repaid monthly/fortnightly/weekly.
Because 6 month loans almost always have a fixed rate of interest, you will know in advance exactly what you’ll have to pay, and when, and how much the loan is going to cost you overall. You should only take out a 6 month loan if you’re certain you can meet this repayment schedule. Failure to do so could lead to your credit score being damaged, making it becoming harder to secure credit in the future.
Most 6 month loans from payday/short term lenders will be automatically repaid via Continuous Payment Authority (CPA). However, it is usually possible to pay manually or by direct debit instead.
What are the pros and cons of getting a six-month loan from a payday/short term lender? Here’s a non-exhaustive list:
Requirements will vary by lender, but expect to be required to meet the following criteria:
CPA differs from direct debit because they give the company being paid the ability to withdraw money from your account whenever they wish, and to take payments of different amounts without consulting you. Most payday loan companies will use CPA to collect your repayments, however you can cancel this at any point by either consulting with your provider or your bank.
If you need to cash a cheque, it may take up to 3 days to clear it with a bank. Cheque cashing services give you immediate access to your money.
Sometimes you may need a little longer to pay off your loan – this is where a bad credit installment loan could work for you. Read on to find out how to apply.
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