If you need a deposit for something, perhaps for a property, then you may consider borrowing the money. This can be useful for several reasons, but may not always be a good idea. It is worth having an understanding of the advantages and disadvantages of using a short term loan for a deposit and then you will be able to decide whether it is a good idea for you to try or whether you might be better off forgetting it!
- Quick – one big advantage of using a short term loan for a deposit is that it is really fast. You should be able to organise it really quickly and this means that you will have the money fast. Some lenders may be able to get you the money within a few hours. You will need to make sure that you complete the forms correctly and send them all the right paperwork so that you get it done quickly or else you may find that you slow things down yourself. Hopefully you will be quick and then you will get the money into your account quickly. This means that you will be able to use the money really quickly too. So, if you need the deposit fast it can be a great advantage. It might be that you need to use the deposit to secure a property you want and so the quicker you get it the better.
- Easy – it can be reassuring to know that applying for a short term loan is really easy. It can sometimes be really complicated to apply for loans. You may no longer have to go and visit the bank manager, but there is still likely to be a lot of paperwork to organise which can take a lot of time. With a short-term loan it is likely that you will be able to apply online or by telephone. This will be a lot easier and the application forms are also designed to be really easy so that you can get your money as quickly as possible.
- have to repay – you will, of course, have to repay the loan. This may or may not be tricky, it will all depend on your financial situation and how much you have borrowed. With a short-term loan it is likely that you will need to repay it quickly. You might have to repay it all when you next get paid or you may be able to repay it in a few instalments. Either way, you will have to repay it really quickly. The problem with this is that you might need some extra money if you have just paid a deposit on a home. Often when you move, you find that there are extra things to pay out. You may have to pay for removals, for a start. You may also need to pay for extras for the new house such as curtains, lamps, rugs, decorating and all sorts of bits and pieces.
It is therefore really important to make sure that you are able to repay it. You need to be really careful to calculate whether you think that you will have enough money. Make sure that you calculate how much you will have to repay and when and then see whether you feel that you will be able to afford that. Look carefully at your bank statements and what you can normally afford and bear in mind what might change as a result of your moving.
- Expensive – there are always costs when you borrow money. This means that it is important to work out whether you feel that the loan is worth those costs. You will find that different loans have different costs but they all have some. Make sure that you are aware of how much they will cost and then you will be able to decide whether you think that it is worth it. If you are not sure, then you should be able to ask the lender. Make sure that you check out the cost of the interest and any other costs as well and add them together to work out the full cost. Then you can decide whether you feel that it is worth that cost. It can also be worth comparing different lenders. You will find that they vary in how much they charge so it is well worth comparing them to see how the prices compare. It is good to make sure that you are not just comparing them on the interest rate but compare the full cost. Then you will know exactly which one is the cheapest and you will be able to go for that one if you want to spend the least amount of money. Of course, you may decide that you want a slightly more expensive loan because it had other features that you prefer.