Did you know that the average person in the UK carries around £20,000 in unsecured debt, and that as the economic crisis grows worst that number continues to grow? With that much debt hanging over their heads many people are finding it difficult, if not impossible, to meet their financial obligations and are turning to quick loans as a way to tackle their debt.
Quick loans are short term loans that can be obtained fairly easily. These loans are a fantastic way to settle your debt by allowing you consolidate it; you take out a single quick loan to pay three or four of your creditors, and you only have a single payment to a single lender left to worry about.
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There are three primary types of quick loans:
Quick Secured Loans. A quick secured loan is generally the most reliable of the three types of quick loans because it is the one for which the lender assumes the least amount of risk. When you take out a quick secured loan you offer up an asset of some type, such as a house, car or other piece of property that the lender can repossess and sell should you fail to make your payments. This type of loan offers the best potential APR, but beware, when they say they will repossess your assets, they mean it. Don't offer up the roof over your head as collateral if you don't believe you will be able to make your payments. There are other options.
Quick Unsecured Loans. These types of quick loans are also known as short term personal loans, for which a lender allows you to borrow money without having to offer up any type of collateral. If your credit is good these types of quick loans may not present much risk; however, if your credit is poor you may find that the interest rates on these loans simply aren't worth it. Again, it's a matter of using your best judgement.
Quick Payday Loans. Unfortunately, quick payday loans are in many ways the reason that quick loans have such a bad reputation on the open market today. Fortunately, government legislation has decreased the risk associated with using a quick payday loan to tackle your debt. Unfortunately, it's impossible for them to eliminate that debt completely.
If you live in any type of urban or suburban area you're probably very familiar with the terms surrounding a quick payday loan. You walk into a payday lender carrying your most recent payslip and ask for a loan less than or equal to the amount of your paycheck (including interest). You write a postdated check for the date of your next payday, the lender gives you your money, and you use that money to pay for your car repair, medical bills or whatever emergency wouldn't wait until next week.
These type of quick loans pose two major risks to borrowers. Unfortunately, taking out a payday loan often sends them into a spiral of debt where they are forced to continually extend the terms of their loan because they cannot pay back the loan and continue to eat.
With a larger APR the borrower often ends up paying more in interest than they borrowed in the first place. The second risk posed by payday loans is a continuous cycle of debt; the borrower pays off one loan but then has no money, so they take out another.and another.and another.
The bottom line is that, when used responsibly, quick loans are a great way to help make your debt manageable. The important thing is to remember to borrow with care, search for the best deal possible and never borrow more than you can reasonably expect to pay back before the loan becomes due.
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