Is Amigo Loans Right For You!

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By: matthewreilly
on 5th Jun,2013

In the current financial climate, securing a loan may be more difficult than you expect. With unemployment rising to an all time high of 2.
Is Amigo Loans Right For You!

In the current financial climate, securing a loan may be more difficult than you expect. With unemployment rising to an all time high of 2.6 million in 2012 and more and more people losing their jobs every day, ‘high street' loan companies and banks are having to look more carefully at who they can lend to - this means that an ever-growing number of people are unable to be accepted for unsecured credit from their banks or other ‘high street' lenders.

People who can't gain access to mainstream credit have to go elsewhere, sometimes borrowing from lenders who offer loans targeting people with poor credit. Some, unfortunately, fall into the trap of payday loans. These loans, designed to be used for short term borrowing of up to 30 days, are normally single repayment loans, where you borrow small amounts (usually up to £500) and repay in full on your next payday. Many payday borrowers can struggle to repay the loan in full after 30 days, meaning that their loan is rolled over for another 30 days, with them only needing to pay the interest accrued over the original 30 days. The rollover of payday loans in this way causes interest to snowball very quickly.

So, if you're faced with taking out a payday loan, what are your other options?

Guarantor loans, like those offered by Amigo Loans, may be an option to look at, but first it's best think about whether you actually need a loan or if you can get by without one. If you can get a loan at a lower APR you should definitely do so, but if you're unable to borrow at a lower rate through your bank, a guarantor loan may well be the cheapest option available to you - you will need a homeowner guarantor who agrees to make any repayments that you don't make on time. This gives the lender added security and opens you up to a lower APR loan than that of payday and doorstep lenders. Some payday lenders have APRs as high as 4,000%, whereas Amigo loans have an APR of 49.9%, a lot more palatable, if still higher than the rates available to people with squeaky clean credit histories. Another point to consider is that they will not calculate interest daily, so the faster you can pay the loan back the less interest you are charged. This encourages you to repay the loan early, to save money. Even making a slight overpayment will mean that you don't pay interest on the amount you overpay.

So to summarise, If you've been caught up in the recession and have a poor credit rating as a result, it's important to be extra careful with your finances. If you're looking to take a payday loan offer, make sure that you're 100% certain you can pay it back when promised and if you're able to get a guarantor you may be able to find a much cheaper offer than a payday or doorstep lender.

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