We all have heard about the payday loans that can provide almost instant cash to the people who are in need. The concept of these loans is very clear. You want money urgently so you get in touch with these payday loans companies. With a few clicks and within a few minutes, you will be able to get finance deposited directly into your bank account. Though the interest rate may seem to be a little high, you get a quick unsecured loan too. Plus, the payments have to be made on the next payday. The 6 month loans are a modification of these loans. Here, you have a 6 months repayment time instead of a maximum of 30 days. As a result of this, you will be able to get better loan amounts and that too for a more significant period of time.
The best thing about the 6 month loans is that their repayment is quite easy. Let us take an example. Let’s say that Mr. James needed £1500 very urgently. He went to a typical payday loan company in order to get this loan. They give him the loan instantly but suggest that he has to pay a 10% simple interest on that loan. This means that Mr. James will have to return £1150 when his next paycheck arrives. As he is already facing a financial hardship, it is possible that he is not able to return his loan. The company is generous enough to provide him extra time of 1 month but charge double the interest this time. This can go on forever and Mr. James will become more broke than he ever was. Even if he is able to pay £500 back, he will have to pay 20% interest on the rest £1000 which will become quite difficult for him in the long run.
In the case of 6 month loans, he will have to payback a sum of £1150. However, this time, he will have the time of 6 months to return this money. If he is unable to save enough to payback the amount fully in the next month, he can simply divide it into equal payment of £191.66 each month. It will be easier for him to save this way and he will be able to provide the money in full at the end of 6 months. Even if he cannot, he can get another 6 month extension.
All the loans that we review or recommend all have:
- Minimum period of repayment: 6 months. We do NOT recommend taking any loan with repayment period of less than 6 months, as you will have difficulties paying
- Maximum period of repayment: 3 years
- Annual Percentage Rate (APR): less than 12%. Any rate higher than this will negatively impact your finance
- Below is an example of the loan mentioned in this article, with a loan amount of $20,000
|Flat Interest Rate||7.50% p.a. (Effective Interest Rate of 14.39% p.a.)|
|Total Interest Charged for the Loan||$20,000 x 7.50% p.a. x 3 years = $4,500|
|Loan amount + Total Interest||$20,000 + $4,500 = $24,500|
|Monthly Instalment||$24,500 / 36 = $680.56|