hen thinking about advisable as a long term means of
borrowing money, most borrowing money, and the amount
people look at loans as of credit you can get is often
the most sensible option. fairly low. .
Although it is true that loans
are often a good option for Credit cards
borrowing money, they are also
inflexible, and if you are Credit cards are one of the most
someone who wants to pay back common alternatives to loans, and
your loan early then there can be can provide you with a good
heavy penalties. However, there source of extra money when
are some alternatives to loans if needed. If you can get the level
you want to borrow money: of credit you need and are able
to pay off the bill promptly,
Overdrafts then you will pay little or no
interest. However, the major
One of the cheapest ways of problem with credit cards is that
borrowing money is through the the interest is usually higher
use of an overdraft, especially than a loan, and there is a
if you want to borrow money on a danger of getting too many cards.
short-term basis. Your bank can If you avoid these dangers, then
agree an amount of excess to the using a credit card as an
amount you currently have in your alternative to loans can work
account, which you can use but well.
will pay interest on. By
authorising an overdraft you can Mortgages
use this money as a permanent
line of credit. Some banks even Mortgages are perhaps the best
off interest free overdrafts. way to borrow large sums of money
However, overdrafts are still not over a long period of time. You
can add credit to your mortgage This is a good method for buying
by borrowing against the equity a car as the interest is often
in your home and adding that lower than a normal loan, and it
amount to your repayments. The is made easy by the fact that the
advantages of a mortgage are that credit is provided by the seller.
the interest rate is low and the However, it is called ‘hire’
payments are spread out so the purchase because until you finish
payments appear small. However, all of the payments, you do not
because you are paying back over own the item, and if you miss
a long period of time, the payment the item can be
interest can still add up, and repossessed.
you will not pay the amount back
for a long time. Which is best?
Hire purchase Deciding if one of these loan
alternatives is right for you can
Hire purchase is useful if you be tricky, but to help you decide
are borrowing money to buy a car you should work out what it is
or high value electrical goods. you want to borrow money for, how
Car dealers often offer this long you want to be paying back
method of borrowing money during the money, and your overall
the sale. In hire purchase, you financial situation. If you look
pay a deposit and then pay at all the options, then you will
monthly payments to the provider. find the best method of credit
When these payments are finished, for your needs.
then the item belongs to you.
About the Author:
Peter Kenny is a writer for creditcards-gb.co.uk. For additional articles and an extensive resource for everything about credit cards, please visit us at Credit Cards and UK Credit Cards
Read more articles by:
Peter Kenny
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