Fast loans offer a borrower a quick source of funds for which he or she does not have to wait for a long time. This form of loan ensures that in times of emergencies a person does not have to worry about funds. A normal loan has a complicated and long procedure for application and approval. There are various documents required at the time of application and there is even an interview held for the same. A person’s employment history is studied and his credit rating is also checked. A person’s credit rating gives the lender an idea on how reliable the borrower is and offers him an assurance on the possibility of repayment of the loan within the stipulated time. A lender would also want to know the purpose of the loan. Once all the information is gathered, the lender will inform the borrower whether he has approved the loan or not. The entire process takes too long if the funds are required immediately. At such times, a fast loan is the best possible option available.
A fast loan is also called a form of payday loan. These loans are usually taken for a short period of time due to the high rate of interest. However, there are various benefits of taking such a loan. Unlike with normal loans, the time from application to approval to funds transfer is extremely short. In fact, the period could also only be 1-2 business days. There is no credit rating check done and the loan is not based on the same. In addition these loans are unsecured which means that the borrower does not have to give an asset as a form of collateral to the lender. There is also no limit on how small the loan amount could be or the repayment period. The loan amount could range from £50 to £1000 and the period from 15 to 30 days. Fast loans are quite popular in the UK due to these various factors. In fact from 2006 to 2009 itself, the number of people who have taken such a loan has risen by four times. Loans of £1.2 billion have been taken by 1.2 million people. The number of loans today has increased even more than before.
What to Avoid with a Fast Loan
Despite the advantages and benefits of taking fast loans, there are also various risks involved. It is important to remember that while these loans are unsecured, the rate of interest is much higher than with any other type of loan. There are also different rules and regulations with regard to the rate of interest and the method of repayment. Here are some things a person should beware of when taking a fast loan.
Most lenders today have an online presence. This allows the borrower to know about the company. Use this feature to check the company’s background and previous customer experience as this is a good indicator of how reliable it is.
A reputed lender would have all the rules and regulations clearly mentioned on his site. Before making a decision, check the same carefully.
Online sites also offer the option of comparing interest rates between different lenders. It is important not only to check the rates of interest, but also rules related to repayment of the fast loans and fines for defaulters. These are things the borrower must be aware of.
Ensure that the lender you are looking at is following the guidelines placed by the federal and state government with regard to such loans. The rate of interest charged must match the prevailing interest rates.