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What’s the best way to borrow money? Unfortunately there is no simple answer to this question, as it can depend on a number of personal factors. But we’ve listed a few of the top tips and tricks below when it comes to borrowing money, to help you get the best deal!
If you need to borrow money, taking out a loan isn’t your only option. There are various ways of getting the funds you need – it’s up to you to determine the best solution based on your circumstances.
If you’re lucky enough to have family or friends that can lend you money, this is a great option, as you won’t have to pay any interest! Just make sure you agree on a timeframe beforehand when it comes to paying the money back, to prevent any tension arising.
Credit cards can be one of the cheapest ways to borrow money, if you have a good credit score. A lot of credit card companies offer 0% interest cards for the first few months, so you can borrow interest free as long as you can repay the credit in the time frame allowed.
If you’re looking to buy an expensive one-off item, such as a new sofa or fridge, you should be able to get it on interest free credit and pay in instalments. Even if you are charged interest, this can still be a cheap way of making a large purchase.
One of the quickest ways to borrow money is to take out a loan. This can be a long term financial commitment, such as a mortgage, or a short term loan, like a payday loan or guarantor loan. The interest rate will vary depending on the type of loan you take out, as well as the lender.
Many people only need a loan for a short period of time. According to The Money Charity, around 50% of the households in the UK have either no savings or less than £1,500 in savings. So when an unexpected expense crops up, approximately half the population won’t have enough money to cover the cost until they are next paid.
Such common occurrences are the reason why payday loans became so popular. With a payday loan, you can borrow exactly how much you need, and repay the loan on the date you specify.
While the interest rates for payday loans are often higher than for other types of credit, as they are so short term, you probably won’t end up paying too much interest overall. For example, if you were to take out a £200 loan for 7 days, you’d pay around £10 in interest. Unlike a lot of bank loans, there are also no early repayment fees with payday loans.
Some lenders do offer an option to ‘top up’ your loan, if you need to borrow more money while your current loan is still outstanding. If you were eligible for a larger loan when you first applied, this is essentially the same thing. Other lenders instead ask that you repay your existing loan before applying for a larger amount. This is to ensure that you don’t put yourself into any difficulty by basically applying for a new loan with them, on top of your open loan.
It’s a good idea to check whether a lender allows you to borrow more money on an existing loan before you apply. This information should be provided on their website, but if not, you can contact them directly so you’ll know whether you can top up your loan if needed.
A few decades ago, if you wanted to borrow money, you’d probably have to go to a high street bank, or perhaps speak to the lender over the phone. As the market has grown and become more competitive, bank loans are no longer your only option, and most applications can be completed online.
Comparing different lenders online can be time consuming however, due to the range of options available. Even once you have determined what type of loan you want, the possibilities are endless! That’s why a lot of people choose to use broker services and comparison sites. Both can compare interest rates and other loan features for you, and brokers can also match you with a lender likely to approve your loan application, based on their eligibility criteria.
My Financial Broker have a panel of many direct lenders – simply complete our short and simple application form, and we’ll put you in touch with the most suitable lender. You can apply for loans from £100 and £2,000, and best of all, our services are completely free!