Generally, people think of long-term financing options when it is about a loan. However, there are few short-term loans or payday loan options available as well. These loans range from a year to a few weeks. If you need money instantly, then the short-term loan is the best option for you.
Although there are other ways of borrowing money like asking friends or family or approaching a loan shark, but short term loan from a lender who is regulated by FCA is far better. In all loan agreements, there is something called APR (Annual Percentage Rate). It indicates the interest amount that you need to pay on your outstanding loan balance along with other charges. Remember, the lower the APR, the lower is the monthly payments.
The biggest drawback of short-term loans is its high-interest rate. In long-term loans you keep paying the principal amount along with APR for years, therefore the APR is less. Since short term or payday loans are wrapped up within a year, so the lenders keep the APR high. This is the way to earn some benefit from lending money.
Online UK lender – Loanpig is known for its sincerity and friendliness with borrowers. Even if their APR is high, their terms and conditions are clear so that customers understand every word clearly. If LoanPig is unable to provide their customers with short term loans, then they look for a better lender for them that match with their documents. All business is done online and their representatives are available 24/7.
Whether it is a credit card, long term loan, or short term loan, many of us often get confused on seeing an APR as well as other interest rates and charges on our bill. With difficult banking terms, we’re unable to understand the bill and end up paying it. It is wise to know a few important things, that will help understand a few things better –
- The APR includes other fees that may be charged with the interest rate. (This can happen only when you’ve agreed with the lender to charge you other fees as well). The APR is the total cost of the loan that is involved in a year.
- APR is used to compare several loans to understand which loan is expensive. The factors of the parameter include bank or lender fees, lawyer fees as well as other costs.
- None of the loans are available without the APR added to it unless the lender is a friend or family. This is a way of making a profit from a borrower.
- Lenders may charge you higher APR compared to the one published on their website. This happens when your credit score is bad, so work harder to improve your credit score.
- APR only compares compound interest loans. So if you try to compare it with simple interest, then the loan amount will be incorrect.
- Always use the publisher’s APR calculator on their website to compare other loans in the UK.
APR is very confusing. Every lender interprets it in different ways as they charge different fees accordingly. When you’re borrowing money form a lender, always understand their APR structure. If you find it higher, then ask them for other repayment plan options. Since lenders also have to stay in business, they will always assist you in the best manner.