There is often a fear when borrowing money that it will cost a lot of money. It is certainly worth considering this when you are doing any sort of borrowing. All borrowing has a cost and it is good to be aware of how much this is. However, you should also be thinking about the value for money that the loan is giving you as well and whether you still feel that it is worth it.
It is often very tempting to just buy the cheapest things. However, this is not always a good idea. Sometimes, when we buy really cheap things, we find that they break, do not last very long or do not taste very nice (depending on what they are). Therefore, it is sometimes much better to pay a bit more and you will prefer what you have. Many of us do this as we prefer certain items that are a bit more expensive. This could be things such as us buying branded goods in the supermarket, paying more to travel by train than bus or shopping at a premium clothes shop.
What is the cost of an online loan?
Online loans will vary in cost and so you will need to compare different lenders to see which seems to be the best. Each of them will charge interest and these rates will vary. They may also charge additional fees such as admin charges. These will again vary between lenders. Another factor effecting the cost will be how long you have the loan for. Some online loans will only last a few days, whilst other may last weeks and this will obviously impact how much interest is charged and therefore how much they cost.
If you do not repay the loan on time, you will have additional fees. These rates will also vary between lenders. It might be that you will be charged every time the lender tries to take the money and fails or a fee per day that you are late or things like that. It is well worth investigating this to find out and compare. It can be tempting to think that you will not need to worry about this because you will repay on time. However, you never can be completely sure and if you are choosing between two loans that are really similar on their interest and fees, then it could be the cost of the late repayments which is the factor that decides it for you.
How to work out if it gives me good value for money?
Working out if something gives you good value might seem tricky. However, it does not need to be. To start with it is a good idea to think about what you want form a loan. It is likely that you will be interested in how much it costs, of course, but there might be other things that you should consider as well.
Firstly, it can be a good idea to think about the repayment expectations. Many online loans will have the same repayment requirements, that they will expect repayment in full on your next payday. However, it is wise to check to be sure and to think about whether this method or an alternative one might suit you.
Many people also look for information about the lender. Some might want to use a lender they have heard of, for example. Others might want a lender that has come recommended. Some might want to find out more about the lender so they can judge. Or they might want to look at their website and get a feel for what they are like that way. For others it might just be their customer service that is important. It is worth thinking about whether any of these, something different or nothing at all is important to you when you are choosing between the different lenders that are available for you to use.
Consider what sorts of things you think about when you are looking into buying anything and judging whether you feel it is good value for money and then apply these to the lender. You might want to think specifically about financial products, such as why you chose particular loans, savings accounts, current accounts etc or you might want to look wider at all of the things that you have purchased and what influenced those.
Therefore, you will find that just looking at the cost of a loan will not be enough. You will need to think about what you are getting for that money and this will enable you to be able to judge whether you think that this will be worth it. Consider what is important to you as well. It could be good to write a list of requirements and the prioritise it so that you can match up to the closest lender. It will take time but it will be worth it when you find that you discover a perfect lender that is the right price but also provides you with the service that you need.