When you’re searching for a suitable way to borrow money it's easy to become overwhelmed by the many choices available; Payday loans, credit cards, logbook loans, guarantor loans and more – being faced with so much choice can make it difficult to choose.
Guarantor loans are an important alternative to consider when making your decision - we've compared the to other options you may be considering, in order for you to make an informed choice before applying.
Guarantor Loans Vs. Payday Loans
Guarantor loans and Payday Loans are two very different loan products, although both aimed that those who may struggle to get credit from a bank or building society.
Pay day loans are ideal for small amounts over a very short term - ideal for a quick fix to a temporary problem. Typically pay day lenders required full repayment within a month - on payday as the name suggests.
Guarantor Loans are designed to be a longer term personal loans - they offer much higher borrowing amounts, along with longer repayment terms. Guarantor Loans, including us, can be paid back in installments over 1-5 years, much like an ordinary personal loan.
The cost of a loan from a guarantor lender is also very different to that of a payday loan. Payday lenders ask for somewhere in the region of 2000% - 6000% APR for a loan, whereas Guarantor My Loan would charge just 48.9% APR. Although payday loans aren’t meant to be taken out for a whole year, they can still end up being more expensive and difficult to manage than other means of borrowing.
It is best to consider the following before applying for a for a payday loan; a) you’ve exhausted all other cheaper alternatives, b) you require a relatively small amount and c) you’re able to easily pay the money back by your next payday.
Guarantor My Loan Vs. Credit Cards;
Credit cards are a more traditional ‘go to’ credit product for those who need some cash for a large purchase. Instead of taking out a lump sum loan, a credit card has a certain amount available as a credit limit, meaning that you can spend as little or as much as you like within the total on the card. This flexibility is great for those who aren’t sure how much to borrow; however a credit card may not offer the amount that you require.
In order to pay off a guarantor loan, you’re required to pay a set amount each month. In other words, the money you borrow, plus the interest and any fees, are split equally by how many months you want to pay it back. When paying back a credit card, you largely decide how much you want to pay each month. There will be a minimum payment which you have to honour, but any additional payments can be decided by you.
All of the above alternatives to Guarantor Loans have their place and if used correctly they are perfectly suitable options for many people. It is important that you consider how much you can afford to repay, your current level if indebtedness and the alternatives available to you before making any credit applications.
Guarantor Loans could be the right solution for you if you are looking for £1000 - £5000 which is to be paid back over 1 to 5 years and you have a someone who can act as a guarantor, who is a homeowner too.
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