Instant Loans: Dos And Don'ts When Applying For An Instant Loan
Instant loans can be very convenient if you want a quick and easy way to consolidate your current debts or to make a purchase
. This is because with an instant loan, or 'instant decision loan', there is no waiting period between the application and the loan offer (or loan rejection).
But you need to think carefully about whether getting an instant loan is the right choice for you and, if so, how to choose your instant loan deal. Here are the dos and don'ts for choosing the right instant loan deal, including what pitfalls you need to look out for and how to tell which instant loan is right for you.
DO: Explore all your options
Before deciding on an instant loan, think carefully about whether this is the right option for you. If you are looking for a smaller amount, check if your bank account allows you an interest-free overdraft as this will not cost you anything.
Also, if you think you might have a low credit rating, an instant loan might not be for you. Instant loan applications tend to involve a credit rating check, with lower scores usually being rejected, and this could damage your credit rating further if it happens to you.
DON'T: Be faithful to your current bank or building society
It's always vital to compare loans, including the APRs and any additional fees, costs and conditions, across a variety of different institutions, and instant loans are no exception. You may be inclined to stick with your current bank for the sake of simplicity but remember, if there is a better instant loan deal out there it could be saving you hundreds or even thousands of pounds, depending on the size and repayment time of the loan.
DO: Check your credit rating
Whenever you apply for a loan the lender will probably run a credit check to assess how likely it is that you will end up repaying that loan and the interest on it. To pre-empt any problems, check your credit rating.
Find out if there are any mistakes. If so, you should get these changed and hopefully improve your score so your instant loan application is more likely to be approved. If you have a good credit rating there should be nothing to worry about, but if it is bad then you might be better with a different type of loan. For example, you may be better off with a higher interest loan or a secured loan that you have more of a chance of being approved for.
DON'T: Ignore the extra costs
Some instant loan offers will include a fee for making the instant decision. This may be incorporated into the APR, so find out if you are paying for the service. If you choose to have the instant loan couriered to you then the lender will usually issue a charge for this, too, of around 30-40 pounds.
If you are offered a payment holiday at the start of the loan, take into account the fact that you will still be charged interest during this period, making future payments higher, and that the payment holiday will usually mean that the entire loan will cost you more in the end.
by: David P Walker
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