When the new year rolls in, many people find themselves short on cash, particularly if they have had a particularly expensive Christmas. To cover any past excesses and to get back onto an even financial keel, many choose to take out a loan in January. Whilst this will add extra debt in the short-term, there are also a number of benefits.
Firstly, you may find that your hands are tied by your financial constraints. This could mean that you literally don’t have enough money to cover your bills, or just that you struggle to buy the luxuries that you might otherwise purchase. Either way, getting a little extra finance could be critical.
In this situation, getting a long-term loan might prove to be a little excessive, particularly if you are only short by a couple of hundred pounds. Short-term borrowing options are available, including the widely publicised payday loans, which will allow you to access money in January on the proviso that it is repaid in full in February.
This kind of borrowing can be quite costly, with some lenders charging in excess of 25% interest and additional fees on top of that. However, it is also one of the easiest ways to get cash quickly. Most companies will judge applicants on their current financial status and use their wages as a guarantee against the loan. So even if you have CCJs, are in arrears with your bank or have a poor credit rating, you might still be able to borrow money.
However, if you want a more sizeable amount of cash (usually £1,000 plus), then a personal loan might be the better option. This is not just because of the interest on payday loans, but also because most short-term lenders have strict limits on how much first-time applicants can secure.
So if you need to buy a new car or need to carry out some urgent work on your home, January might be the time to do it. For many, New Year’s resolutions revolve around changing certain facets of their life for the better. In many cases, this will relate to financial matters. If you have been struggling to get your overdrafts under control and have been putting off essential purchases as a consequence, then it might be time to resolve the issue once and for all.
As mentioned earlier, loans aren’t just a means of alleviating a headache for a short period. They should be treated with respect and used to either improve your financial status or quality of living significantly. So if something needs to be sorted out, don’t be afraid to take action. For instance, you might be burdened with expensive credit card debt. If you are paying 24%+ on a debt of £2,500, this could mean that you’re paying £50 a month just to cover the interest. A long-term loan could well prove to be significantly cheaper and allow you to spread the repayments over a more convenient period of time. However, you will need to do your homework beforehand to work out just how much you’re saving and whether it will actually prove to be worth your while pursuing it.
When it comes to payday loans though, there are plenty of benefits to getting a payday loan in the first month of the year, as long as you are able to cover the cost in February. Money is often tight this time of year, so if you find yourself with more going out than you’ve got coming in or you’re faced with an emergency, it can be a very effective and stress-free solution.