Same day loans are an ideal solution for those who need extra cash within a short period of time, as lenders can send the money straight to your bank account on the same day that your application is accepted.
There are a range of different loans on the market and it's important to look at each option closely to see which is the best solution for you. To help you do just that, we've put together this handy guide to show how same day loans differ from other loans and alternative forms of credit. Read on to learn more.
What are same day loans?
'Same day loans' are a variation of personal loans, and they are loans that are sent to your bank on the same day that your application is accepted. With these loans, you apply online and lenders will make a decision on the same day so that you can get your money as soon as possible.
These loans are normally unsecured. This means that the money isn't secured against any assets, therefore they are a less risky option compared to secured loans as you're not at risk of losing your home and possessions if you can't keep up with repayments.
Similarly to other types of loans, you will be charged interest for borrowing and you will need to make regular repayments until the full balance is paid off. However, it's important to note that these loans are usually used on a short-term basis and they have higher interest rates than long-term loans because they are unsecured, and are therefore seen as a more risky option for lenders.
What drives the need for same day loans?
It's no secret that these types of loans have grown increasingly popular over the years, but what drives the need for same day loans?
Due to their convenience and versatility, these loans can be used for almost anything, however, two of the main drivers that cause people to apply for same day loans includes short-term cash flow problems and financial emergencies.
If you've received a bill that needs to be paid today but you don't have the extra funds, a same day personal loan can help you to get the cash you need to pay your bills and tide you over until your next payday. This is one of the reasons why so many are opting for this method of borrowing when faced with short-term financial difficulties.
Accidents and emergencies can happen at any time, and same day loan lenders provide a financial safety net that can help you to get the money you need should a find yourself amid a cash-flow crisis.
Same day loans vs credit cards
There are a range of options out there for those who need additional finances. From credit cards to secured loans to payday loans; the multitude of financial solutions available on the market means that you'll be sure to find a solution that suits your exact needs.
Below, we've looked at same day loans vs credit cards to help you find the right option for you. Read on to discover the difference between these two methods of borrowing.
Features of same day loans
As mentioned earlier, same day loans are short-term methods of borrowing, and the funds are transferred straight to your bank account as soon as your application is accepted. As well as this, these loans are usually for small amounts of money varying from £50 to £1000, however, some lenders offer same day loans of up to £2000.
When your loan is accepted, you can choose to pay it back via a lump sum or via a repayment plan. Your lender will outline exactly when the full amount should be paid, so you can budget your finances and plan around your repayments.
The limits of same day loans
These types of loans are unsecured and they are therefore less risky for borrowers. Despite this, many lenders choose to offset the risk with higher interest rates, so expect to pay more in interest on same day loans compared to other types of loans.
As well as this, it's important to remember that failing to keep up with repayments and making too many loan applications will both impact your credit score. This may make it more difficult for you to borrow money in the future, so it's important to analyse your credit score before you apply so that you don't risk worsening your credit rating.
Features of credit cards
Similarly to same day loans, credit cards allow you to borrow money from banks or lenders. However, instead of the money being sent straight to your bank, you receive a credit card with a spending limit, and you must pay interest on payments made with the card.
Credit cards normally have an interest free-period, therefore you can borrow for nothing if you keep up with your repayments. But as soon as the interest-free period is over, you'll have to pay interest on your payments and you will be subject to late-payment fees if you fail to pay your credit card off in time.
When might a credit card be better?
Credit cards provide a convenient alternative for those who cannot get a loan, and in some cases, they may be a better solution and than personal and same day loans. Some of the main situations in which a credit card may be a better option include:
- Short-term borrowing - If you're looking to borrow for a short amount of time, a credit card may be a better option as you can take advantage of the interest-free period.
- Clearing the debt early - With credit cards, you must make the minimum payments every month, however, you can clear the debt early at no extra charge. Whereas, some loan lenders may charge you for repaying your debt early to make up for lost interest.
- Purchase protection - If you pay for goods or services with a credit card, you are protected by the Consumer Credit Act. Therefore, if you receive faulty goods, you can get your money back quickly and easily.
Once you've evaluated all of your options, you'll be in a better position to decide on the right form of finance for you. Don't forget that it's better to avoid borrowing at all if possible, as this can worsen your financial situation if you can't keep up with your repayments. Instead, try budgeting and using your savings to try and reduce your debt before resorting to borrowing money.