We have all been there – it is the end of the month, you have some money left in your account ready to spend on a real treat, when BAM – you are hit by an unexpected bill. It can feel so devastating when this happens, especially if the bill is a considerable amount of money and you simply don’t know how you are going to pay it.
Whether it is a car bill, medical expense, home cost or something else, any unexpected bill is difficult to afford when you weren’t expecting it. Many people try and set up emergency savings accounts for this exact reason. Some call it a ‘rainy day fund.’ However, even with the best intentions, these savings accounts can look pretty bare, or maybe you simply don’t have any spare change at the end of this month to dedicate to such a cause.
When the savings isn’t there to cover the bill, where do you turn?
Some people apply for a short term loan to cover the expense. There are many advantages to this option. Not only is it quick, easy and convenient to apply online, but you can also receive the cash pretty quickly into your bank account, so your bill can be settled fast.
Of course, when applying for a short term loan, you should be sure of all your options and be responsible. You should only pick a verified lender. Wonga, a short term loan provider, warns that a lot of short term loan providers claim not to do a credit check on your loan application, which is in contravention of the National Credit Regulations. Credit checks must always be carried out, so remember this and perhaps check your credit file yourself before applying, so you know what they will see.
The next thing you should think about when you are applying for a loan to cover your unexpected bill is comparing rates. Many lenders offer all kinds of rates, but you need to read the terms and conditions carefully to ensure you have all the facts to hand. There are some useful tools for comparing interest rates online, which are free to use.
You might also think about your repayment period. Can you repay the loan in 2 months, 3 months, or 6? Some lenders are very flexible and let you choose the repayment time. Think about how you will repay the loan – do you have the spare cash to cover it each month? The longer the repayment period, the smaller the payments, but the more interest you pay over time. This is all a balancing act and you need to think carefully about what might work for you. You might also think about any upcoming payments you have, such as car insurance or an annual fee, and incorporate these into your plans so that you can make a decision about the short term loan repayments.
After careful consideration, you can apply for the loan online and quickly settle your bill. In the future, you might want to build up that ‘rainy day fund’ – easier said than done, of course, but it does mean you are prepared in case this kind of thing ever crops up again!