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Representative APR 49.9%

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Representative APR 49.9%

As we have written about extensively in the past here on the CashCompare blog, there are various reasons why you might conceivably seek to take out a loan.

A true “emergency” situation might have come up, such as a need to pay unexpected veterinary bills, or the car that you use for your daily commute failing to start on a morning and requiring repairs. Or you may be yearning to carry out certain home improvements, or to indulge in the escapism of an overseas holiday.

But it’s one matter to get a loan, and it’s another matter to get the right loan. So, let’s take you through the essentials of ensuring the latter.

Firstly… Is Applying for a Loan the Right Choice for You?

This is, of course, a very big question in itself, and it is likely to hinge on a wide range of factors. Those include the specific reason you’re thinking about applying for a loan in the first place, as well as your credit score, and what your longer-term plans are.

Not everyone has the luxury of extending their overdraft slightly, taking out a credit card that allows for interest-free purchases for a certain period of time, or simply asking family or friends for help.

But of course, it is well worth thoroughly investigating such options – or others – before you commit to a loan. After all, even the lowest-risk loan still presents the reality that you will need to ensure timely repayments from the start to finish of the loan term.

While loans can provide necessary financial support, it's important to consider both the benefits and potential risks, such as increased debt and interest obligations.

So, What Steps Can You Take to Ensure You Get the Most Suitable Loan Deal?

The below measures could all go some way to ensuring you put in place a loan agreement that works for you:

Using a Credit Broker or Comparison Site: The fact is, one lender can only present you with whatever one lender can offer you. A credit broker such as CashCompare, on the other hand, can put forward multiple personalized loan quotes from across the market, not forcing you to put all your faith straight away in a single lender. CashCompare is authorized and regulated by the Financial Conduct Authority, ensuring compliance with the highest industry standards.

Only Borrowing the Bare Minimum: The smaller the loan that you take out, the lower the financial risk you will be exposing yourself to when taking out the loan. Short term loans can have very high interest rates, so if you can combine a loan with financial help from family and friends (for example), this will further help to reduce your risk.

Taking Account of Your Credit History: It’s free to check your credit rating online with the UK’s three main credit reference agencies – Experian, Equifax, and TransUnion. The credit scores that you are shown as a result of this process, might well greatly inform what decisions you make on seeking out a loan. Keep in mind that different lenders may interpret your credit score differently, affecting your loan terms and interest rates.

It Could Take Just Minutes to Determine Your Options for a Short-Term Loan

Something else that you might appreciate knowing: when you use our online loan request formhere at CashCompare, you will not be under any obligation to accept whatever personalized loan quotes you are presented with from this process. So, this could be a great way to determine what your likely loan options are, considering the broader market rather than just one or two lenders.

To reiterate a theme that we have previously written about here at CashCompare, a short-term loan is not, in and of itself, entirely a risky proposition, nor something that will solve all your financial problems. Instead, much depends on how such a loan is used, and how it fits in with the broader scheme of how you manage your money.

So, with all that in mind, here are some of the steps you can take to reduce the degree of risk a short-term loan might present to you.

Borrow as little money as you can

This might seem obvious to some of our blog readers, but it is worth re-emphasising nonetheless: a short term loan is definitely not the kind of thing where you should borrow more money than you strictly need, just because you theoretically can borrow that much money.

After all, all funds that you borrow will need to be repaid. And with short-term loans potentially having APR rates of as much as 1,500% or more, it can be a seriously risky course of action to take out a loan for anything more than you need. This rate is a representative example; actual rates may vary depending on the lender and your circumstances.

As part of this, you should do everything you can to exhaust other financial avenues before you depend on a loan. Are there, for example, any inessential possessions of yours that could be sold to raise funds? Perhaps there are friends or family members who you could borrow money from, or maybe you could cut out certain things from your life – such as paid streaming subscriptions, a daily coffee, or going out to the pub or bar every Saturday – to help you find that vital cash?

Never commit to a loan that you know you won’t be able to pay back

This really is one of the ultimate rules of borrowing, that should be set out in bold red text: do not, ever, take out a loan if you are already aware you won’t be able to repay it.

If you do commit to such a loan and inevitably find yourself in trouble later, you will be in a much worse financial position than the one you are in right now. So, applying for a short-term loan out of desperation isn’t going to be a course of action that will serve you well.

Even if your situation genuinely seems desperate and you have investigated all other options you can think of, it would be a much better idea for you to seek help from a non-profit debt counselling agency, such as StepChange or National Debtline.

Of course, “life happens”, and you might be confident that you can repay a loan at the time you commit to it, only for a later change of circumstances to affect your ability to keep on top of your borrowing. But even if that happens, you should contact the lender immediately, so that you can agree on a feasible way for you to complete your repayments.

Compare loans online with the help of a reputable comparison website

When it comes to the world of short-term loans, there are direct lenders, but there are also credit brokers, and it is important to be aware of the distinction between the two.

As the term suggests, a direct lender is exactly that – a lender. They may be able to present you with a short-term loan option, but if they are the only lender you have approached, you will have little way of knowing whether an alternative lender out there could give you a better loan deal with a more competitive interest rate. That is unless, of course, you approach lenders individually, one by one.

But why should you do that, when you can instead go to one place? This is where the right credit broker can come in. Here at CashCompare, we are a credit broker and comparison site that maintains relationships with a range of leading lenders.

You apply through us, using a single no-obligation loan request form, and we will then get to work on sifting through the available loan products from our featured lenders. This process will make it easier for you to find and commit to a loan that represents the lowest possible risk to you.

So, if you are looking to compare loans online, why do it the slower, more laborious, and potentially riskier way? Our quote request form takes just two minutes to complete and submit, and you will be under no obligation to accept any loan we present to you through this process – a further step that will help minimise your risk.

Please note that loan approval is not guaranteed and depends on individual circumstances and the lender’s criteria.

We advocate responsible borrowing and advise all our readers to consider their financial situation carefully before taking out a loan.

It’s not exactly news that weddings are expensive things to organise – but still, it’s good to put a few hard figures on the cost to give some all-important perspective. According to research by the Hitched website, the average wedding in the UK cost £18,400 in 2022, which was 6% up on the figure for 2021, and more than double the amount spent during the COVID-affected 2020. 

So, you can see that after a period when many people weren’t exactly spending a huge amount on their weddings, those costs have crept up again. This is to be expected, during a time of rampant inflation combined with couples wishing to hold in-person nuptials again. 

If, then, you are set to tie the knot, we can well understand you carefully poring over all the costs, and considering how you can both save and add a bit more to your wedding budget. 

With that in mind, you may have heard that a lot of couples have taken out wedding loans in recent years to help pay every penny incurred by their big day. But might using such a loan be the right option for you and your sweetheart, or could there be better alternatives? 

In certain situations, a loan might be an option to consider for added wedding expenses.

As the information we set out above makes clear, the typical wedding cost in the UK these days is hovering around tens of thousands of pounds.

Naturally, every couple’s exact situation is different. At CashCompare, we offer short-term loans that typically range from £100 to £5,000. Such loans might be considered by those who find a small shortfall in their wedding budget.

And in what specific circumstances might you require that slight budgetary boost? Well, it may be that you have your hearts set on getting married on a particular date, and therefore want to be able to access extra funding for your wedding sooner, instead of waiting until you have saved up more money. 

Or maybe a loved one of yours was previously going to fund certain parts of your wedding, but has suddenly found themselves in a situation where they are unable to do so, thereby leaving an unplanned-for gap in your budget? 

The above are just some examples of circumstances in which couples think about – and take out – wedding loans. If you have a favorable credit rating, you might access certain interest rates, but it's essential to be comfortable with the repayment terms.

But wedding loans may not be the right solution for everyone 

The reality is, it is important to consider your specific circumstances extremely carefully before committing to any kind of loan, and the situation is no different when it comes to wedding loans. 

After all, taking out a loan to fund your wedding means you will be starting your married life with a debt. If your circumstances are such that you are confident of paying that money back, or if you only borrow a relatively small amount, this might not seem like a big issue. 

However, it could be a reason to consider whether there are better alternatives – such as cutting back on certain things you were initially intending to spend on your wedding, to help make possible the things you really want from your wedding. 

Do you really need to have a DJ or band when you could have a Spotify playlist instead, and do you really need to have a guestlist quite that long, consisting of some distant relatives you might barely know? And of course, there’s often a lot of scope for haggling or attractive discounts on the prices for key wedding services such as the venue, dress, and photographer. 

Essentially, all the usual truths about the importance of responsible borrowing also apply to wedding loans, including the importance of not borrowing an amount that you might struggle to repay. It’s also crucial to consider the amount of pressure that an outstanding loan could put on your relationship, and what would happen with the debt in the event of the relationship breaking down. 

Remember that a failure to repay what you owe could damage your credit rating, thereby harming your chances of being able to borrow money for anything else in the future. So, the impacts could be felt for a very long time after your wedding day, and perhaps even after the marriage itself. 

Could a short-term loan obtained via CashCompare be the answer? 

Naturally, no couple planning their wedding is in exactly the same situation as another, so there’s no “one size fits all” answer to this question. You really will need to think carefully about your own priorities and circumstances, and whether you will be able to pay back any loan to which you commit.