If you're looking for a loan that will give you quick cash and less hassle, there are two popular choices to look into. They are the 12 month loans and payday loans which are both designed for short-term and quick fix solutions. Both are also unsecured loans and are widely available on the high street and online.
Because payday loans and 12 months loans are easy to avail, many borrowers who find themselves in financial situations turn to the product for solution. Between the two, however, which one is better?
Payday loans are short-term unsecured options which offer loans from £100 up to £1,000. The financial product is designed for emergency purposes and pressing expenses like car repair or overdue bills. Since the amount is smaller than other types of loans, the term is also shorter, usually 30 days or can be longer up to 3 to 6 months depending on your set-up with your lender.
In terms of cost, payday loans are being criticized for its high APRs. On average, the loan comes with 1,000% APR which when compared with conventional options are definitely pretty steep. On one hand, it is only meant for short-term purposes. Payment is usually expected on your next paycheck and if you do pay on time, the interest wouldn't be as big as when the term is 12 months or longer.
To know more about payday loans, click here for additional information to help you make an informed decision about the financial product.
While payday loans are only meant for 30 days or 6 months tops, 12 month loans are exactly what its name implies. It is a type of unsecured loan which is payable over a 12-month period. You can borrow from £600 up to £2,000 with the Representative APR at about 400%.
If only looking at the APR, 12 month loans are similar to logbook loans in terms of cost but it's certainly cheaper than payday loans. Repayment is expected monthly and is usually deducted on your debit or bank account as detailed on the terms of agreement.
When it comes to ease of application and approval rate, payday loans maybe more easier to get seeing that there are no credit checks involved. With 12 month loans, lenders usually conduct credit checks to ensure that the borrower is capable to make the monthly repayments. In the event that you fail the credit check, you can opt to get a guarantor instead. This is one alternative that many lenders of 12 month loans are offering to ensure that bad credit wouldn't stand in the way of you getting the money that you badly need.
Once you have a guarantor with good credit secured, approval for your 12 month loan shouldn't take long. The guarantor will take of repayment in case you miss or delay with sending yours. This set-up reduces the risks for lenders thereby allowing them to approve your loan despite bad credit.