Fixed rate interest is exactly as its name suggests – interest fixed throughout the period of the loan.  The advantage of having a fixed rate interest is that it is easy to calculate the exact figure you need to repay.  Your budgeting can then reflect this.  The downside is that there is usually a breakage fee (cost of funds) if you want to repay the loan early.

Floating Rate Interest

Floating rate interest can work in a number of ways. Usually, however, you’ll see this described as being: Base Rate plus basis points.  Although the basis points (which is a percentage figure) are fixed, Base Rate is a floating rate set by the Bank of England from time-to-time; hence the overall interest rate floats.  The upside to a floating rate interest is that there is rarely a breakage fee – if you make early repayment.  The downside is that the rate can swing very quickly against you – as happened in the early 1990s when the Bank of England was raising Base Rate almost weekly.

The best way to try to calculate whether to use fixed rate interest or floating rate interest is to ask the lender to do an Annual Percentage Rate (APR) calculation for you.  APR calculations are adjusters, and so this should help you to determine the real rate of annual interest you’ll need to pay on the loan.

THINGS TO THINK ABOUT

Finally, here are some things to think about if you’re considering a loan:

1. is it absolutely necessary for you to fund the purchase through a loan.  Sometimes dipping into your saving will mean you save in the end;
2. look around for the cheapest (cost) loan;
3. when looking at interest rates, always ask an APR calculation;
4. make sure you fully understand the security issue;
5. don’t agree to any add-ons, like insurance, unless you believe you’ll need them;
6. if you’re going to need to fund the purchase for a period over one year, a loan will nearly always be cheaper than other forms of short-term debt financing – like a credit cards;
7. don’t sign any loan agreement unless you’re completely satisfied you understand what’s being asked of you.  All too often, we are in a hurry to buy the product and don’t read the small print.  Remember, “buy in haste, resent at leisure.”

Basically, as its name suggests, an instant payday loan is a short-term instant cash advance loan.  As a quick payday loan, the loan is an unsecured loan and is used to finance short-term shortfalls in your monthly cash-flow.  Due to the fees payable on a payday cash loan, an instant payday loan is not intended to be used over a long-term period.

In order to be eligible to apply for fast payday loans, you need to be in full-time employment, you must have a current valid current account, and you must be able to show that your wages are paid into your current account.  So, as long as you can arrange to fax a copy of your pay slip and bank statement to the payday loan company, you should able to apply for a fast payday loan instantly.

Moreover, as a form of cash advance, payday loans are not usually subject to any credit check; thus a no credit check payday loan is an ideal way for someone who has a bad credit history and cannot obtain a loan or credit card to make up any immediate shortfall in their cash-flow.

Normally repayment of a fast payday loan needs to be made on your next payday, but in any event the period between you being approved the loan and repaying the loan cannot usually be more than 14 days – but some loan companies do give 18 days credit.  Once your wages have been paid into your current account, the payday loan company will send you a request (on the same day) for them to make a withdrawal from your account to repay the quick payday loan, plus any interest and charges, you owe them.

If you need to apply for an instant payday loan, you can do so very easily online without needing to have to go to the offices of the lender.  Once approved, the money is then sent to the bank account of your choice.  As such, payday cash loans are a quick and convenient means of covering any short-term shortfall in your budget – especially if you have a history of bad credit.