Whether you’re needing to make ends meet for the month or saving up for something a bit bigger, there are a range of different options available for those who are needing access to a loan. From short term loans to borrowing from family and friends, different finance options will be suited to different situations.
Therefore, it’s important to understand the funding options available, as well as your current situation, before making a decision on which type of finance to apply for. Below is a list with some of the main types of loans, and other forms of finance, available in the UK:
- Advances at work
- Credit cards
- Overdraft facilities
- Short term loans
- Friends and family
Whilst the funding options listed above can be very useful for those who are in need of finance, they are not the only types of loans available. There is a whole range of different loans and funding options available to UK consumers, all specialising to cater for different financial situations.
Therefore, if none of these options are applicable to your situation don’t panic! There are a whole host of other specialised loans and finance options that may be able to help.
Advances at Work
Advances at work can allow an employee access to some of their wages upfront, these are typically called pay check advances, and can be used to for employees who are needing early access to their income. Some companies have even adopted schemes that allow their staff access to wages as and when they earn them, rather than providing a full wage at the end of the month.
Credit cards can be another solution for those who are seeking finance. A credit card works by providing the account holder with a certain amount of credit for them to use throughout the month. Whatever the account holder uses within that month must be paid back. If the credit card bill is not paid off in full, a certain amount of interest will be applied. When the credit card bill is paid off in full, the account holder will not have to pay this interest.
An overdraft facility works in a similar way to a credit card, in that it provides the account holder with a certain limit of funds for the account holder to use when necessary. This is typically connected to a bank account, with account holders “crossing over” into the overdraft when they run out of funds in their account. For example, someone who was borrowing £40 from their overdraft would have a -£40 balance in their account.
The account holder will be charged a certain amount for using their overdraft, the exact charges being dependent upon the type of overdraft facility. For example, some student and graduate accounts will provide account holders access to a fee-free overdraft amount, whilst others will charge for its usage.
Short Term Loans
A short term loan, as the name suggests, is a type of finance in which the borrower has to repay the money back in a short period of time. Payday loans are a type of short term loan that can help to cover a borrower’s financial needs before their next pay check.
Whilst the payday loans industry has recently seen the collapse of some of its most notorious lenders, there is still quite a significant demand for this means of short term finance.
When considering this means of short term finance, it’s important to find a provider who is upfront about all fees and charges and failing to pay can lead to added fees and damage to your credit score. See things to consider when getting a payday loan.
Friends and Family
Getting money from friends or family is the most popular form of borrowing across the world and is commonly used for buying a new car, getting on the property ladder or helping with your children’s school fees.
This type of finance can often be more flexible than loan repayments because there are rarely set terms or interest charged – and will not come with damages to your credit score if a repayment is missed. As with any type of loan, it’s vital to ensure that the money can be paid back within the given time frame before accepting money from either friends or family.