When you want to borrow money, it’s often the case that you need the money in your account quickly. The idea of fast loans can have negative connotations, simply because when choosing a loan, we’re encouraged to shop around to find the best deal.
However, fast loans are not loans that you necessarily apply for quickly, you should still do your due diligence to make sure you’re getting the best deal. A ‘fast’ loan simply refers to the speed that the money will arrive in your account, and in certain circumstances, that’s one of the most important things to consider.
What is a fast loan and when is it appropriate?
Fast loans are personal loans for relatively small amounts of money that are borrowed over a short period of time. For example, if your car breaks down unexpectedly and needs to be repaired so you can travel to and from work but you don’t have the cash in your account, a fast loan could be the way to go.
You could borrow just enough to get the car fixed and repay it in a matter of days, weeks or months. The important issue here is that you need the money in your account quickly, ideally within 24 hours. That’s when a fast loan really comes into its own.
What can fast loans be used for?
One of the benefits of a fast loan is that they tend to be very flexible, with no restrictions on what the money can be spent on. Some lenders will allow you to borrow money for as little as one day or up to six months. That flexibility makes a fast loan suitable for all sorts of customers and a viable alternative to going into an unauthorized overdraft.
How quickly can the cash be in your account?
That varies quite considerably from lender to lender and also depends on how you apply. Speed and convenience are the two major benefits of this type of loan, so lenders will try to get the money to you quickly. While some lenders will promise to have the money in your account within 24 hours, others can approve the loan and pay the money to you in as little as an hour.
This lending guide from Wonga has more information about how fast your loan can actually be, but they are quick to point out that same day pay-outs are not a guarantee for successful applicants as the speed at which cash is processed and then deposited into your bank account is determined by your bank ultimately no matter how quickly a loan company handles their side of the arrangement.
What to look out for with fast loans
1. Beware borrowing over longer periods
Fast loans are designed to be repaid quickly, over no more than a few months as a maximum. Any longer than that and the high rates of interest that this type of loan attracts will add up. If you want to borrow money over a longer term, then an instalment loan could be a better option.
2. Pay attention to any fees and the APR
With longer-term loans, the APR (what is this?) tends to be the primary indicator of how much the loan will cost. However, with a fast loan, the APR can be misleading because the loan is usually taken out over such a short term.
While you should still pay attention to the APR, you should also look very carefully at any fees or charges that apply. Reputable lenders will tell you exactly what the total cost of the loan will be inclusive of all interest and charges. This is the figure you should use for comparison purposes.
3. Only get a fast loan if you know you can repay it in time
A fast loan is only an appropriate product for you if you’re certain you can repay it on time. As soon as you miss a payment, that’s when the cost of this type of product outweighs any benefits it can bring. If you’re not sure whether you can afford the loan, then even if you’re desperate, you should stay well away.