By Lauren Veit
If you are in a situation where you are considering a few options about whether to borrow money, you’ll be wondering which is the best route to take. Whether you are looking at using your overdraft (or an unarranged overdraft) for a short period of time, or taking out a payday loan, you’ll want to know exactly how you’ll be affected before committing to either choice. Alternatively you might want to think about a personal loan through your bank or a traditional high street lender – though this is not nearly as easy as it once was to achieve.
Choosing between a payday loan and going overdrawn with your bank and current account is a straightforward answer for us. There is a charge for your overdraft if you have an agreed limit in place. This is most likely a monthly charge and the interest of the amount overdrawn each month. On top of that there might be an annual renewal and another charge. This all adds up. Compared to a payday loan it might be too much interest and additional fees that is costing you money. Especially if you are only looking for a bit of a boost to your cashflow for a few weeks until next payday a payday loan is clear and transparent in how much money you have to pay back (interest and all), whereas you might not be exactly sure how much going overdrawn will actually cost you in the long run.
Of course, it is all about the quality of the lender, and that is where the tightening up of the industry through the FCA has made a payday loan a much more attractive option for borrowers in the last few years. If you are thinking of taking out a loan through your bank or another traditional high street lender it isn’t as easy as it once was, and a payday loan could be the only line of credit you can realistically turn to.
For starters look at the time it takes to process an application for credit. With a traditional bank there are forms to fill out, sometimes guarantors to source and vet, as well as the wait for the process to be completed. This can often take weeks (or even months depending on the size of the loan), whereas the alternative of a payday loan is staggering. Through a simple and fast application process with a responsible payday loan lender you could have the money you are looking for sat in your bank account within a few short hours of the application being sent off through the website.
There is interest rates and fees to take into consideration when taking out a payday loan, but it is all clear and above board before you make a move. You’ll know when you are next making a payment, exactly how much, and how much interest is added to the lump sum of the loan itself. This makes for a transparent and easy process that can help you out immediately, not three weeks down the line.
