Many of us find ourselves in need of a little extra money sometimes. We can’t always afford to pay for the surprises that life throws our way – whether we need to pay for a new car so that we can go to a new job that’s out of town, or we need to fix something that’s gone wrong within our home. There are unexpected expenses almost everywhere we turn in life, and many of us simply don’t have the money sitting around in a bank account to help us out when we need it most.
Because of this, a lot of people turn to loans as a solution for their financial needs. Of course, loans aren’t the only way you can get your hands on the money that you need. Another opportunity could present itself in the form of your bank’s overdraft facility. Many people have some manner of overdraft included with their bank account as standard, and it can be a simpler way to borrow money depending on the amount of interest you must pay.
Using an Overdraft Facility instead of a Loan
So long as your overdraft facility use has been approved by your bank, it can be a great way to access some extra cash when you need to pay for something suddenly or as part of an emergency. Though overdraft solutions are best used for only a very short amount of time, they can allow you to borrow the money that you need from your current account without incurring huge charges or worrying about the process of applying for a loan.
Some people will be given an overdraft facility as an automatic aspect of their bank account, whereas other peoples will need to request that the facility be supplied to them. The important thing to keep in mind is that you need your overdraft to be authorized, as this will allow for a limit on how much you can borrow to be set by the bank itself. Though some banks will ask you to pay for a fee on your overdraft facility, others will give you a chance to access 0% interest for a short amount of time, depending on how much you borrow.
Remember, usually overdraft facilities that don’t have any interest payments will only let you borrow small amounts of cash, so if you’re in need of a big purchase and have no other cash to supplement the spend, you might need to consider other services. Additionally, it’s important to ensure that you stick to the limit that is provided to you when you use an overdraft account, as charges can be steep if you go over the amount that you are permitted to borrow.
Using an Unsecured Loan
If you find that you need quite a lot of money urgently, but not so much that you will need to mitigate the risk of your borrowing behavior by using a secured loan, you could consider opting for a personal or unsecured loan instead. A lot of people use unsecured loans to help them get their hands on money fast when they need to make big purchases for their home or their car. These financial solutions will let you borrow a lot more than a standard overdraft facility.
Another benefit of an unsecured loan is that you may be able to access one that comes with fixed interest rates. This simply means that you’ll know exactly how much you’re going to need to pay out each month, and how long you’re going to have to make your repayments for in order to get rid of your debt. This can be very useful as it allows you to manage your debt without getting caught up in accidental missed payments. With flexible loan terms, you’re left to make payments by your own devices, which can be tough to manage if you’re not great at dealing with money. On the other hand, with secured loans you can simply set up a direct debit that gets the money sent to the lending company every month at the right time so that you never miss a repayment. This way you can reduce your chances of having to pay steep penalties or face repercussions.
Crucially, with an unsecured loan, you’re not putting a house or car up against your loan that the bank can repossess if you don’t make payments on time, but that doesn’t mean that it isn’t important to be cautious with the way that you may payments. Unsecured loans can come with plenty of fees, and you may even have to pay extra if you try to pay too much of your loan at once time. Make sure that you check the terms of your loan before you sign any agreements so you know what you’re getting into.