Sneaky ways companies can put you in more financial stress with a Christmas loan
DISCLAIMER: THE TROUBLES ARE FURTHER DOWN BELOW
With holidays approaching you will start seeing more and more advertisements that have a purpose of taking your money as fast as possible…
It is the same when it comes to lenders and their weak processes and checks that leave you with more loans than you can pay off. Of course we aren’t talking about all lenders, but there are always THOSE who are slightly less responsible and don’t assess your circumstances fully.
You see, holidays are an amazing opportunity to spend time with your loved ones and to experience the true beauty of this life, but…
Most people get shivers running down their spine when the thought of all those expenses comes…
That daunting feeling that haunts you…
IT IS NOT YOUR FAULT
If holiday spending fills you with more anxiety than joy, you’re not alone. In fact a big number of people want to take a holiday loan due to the rising prices and holiday expenses…
Whether it is for those Christmas presents under the tree or other expenses that you cannot sustain alone, Christmas loans or holiday loans can be a great helping hand. But they can take their toll…
Because people spend more money around the holidays on things like Christmas presents and food for a family dinner, some traditional lenders actively market loans for the season. However, it’s crucial to keep in mind that a Christmas loan, also known as a holiday loan, may have a high cost due to excessive fees and APR.
First we will dive into the risks and benefits of those infamous Christmas loans that are active at this time of the year, giving you all the information you need to fight through all those advertisements that often misrepresent Christmas loans…
Then we Will cover some of the most prudent marketing strategies that leave thousands of people with more expenses than they can handle… The information down below can potentially save you hundreds of pounds.
Let’s get into it!
What are Christmas loans and how do they function?
You can come across lenders offering “Christmas loans” specifically when you look into your holiday possibilities. In reality, what they’re offering is a personal loan intended for those in need of a little more cash throughout Christmas or other special holidays.
A Christmas loan or holiday loan usually is an unsecured loan, much like other personal loans. Your credit score and income are just two of the many variables that affect your terms and eligibility and differ according to the lender. You must have good credit to be eligible for the most enticing terms and the lowest interest rates.
These loans are from £100 to £20,000 and have annual percentage rates from 6% to 99%. They can get you cash quickly, too – some lenders are able to fund a loan the day after you apply.
If you are using an online service that provides Christmas loans or holiday loans you’ll get even faster results, we’ll touch up on that further down below.
What are the risks of taking Christmas loans or holiday loans?
There are risks involved with most forms of credit for both you and your lender. Here are a few drawbacks to consider before applying. Here are the risks:
- Fees – A prepayment penalty or an origination fee may be levied by some lenders. These extra costs can pile up when it comes to Christmas loans or holiday loans.
- Impact on credit score – Defaulting on a loan or making late payments can have a negative impact on your credit scores. To ensure that you can afford the payments, pay particular attention to the expected repayment amount.
- Your financial situation can deteriorate – In the event that you are unable to return your Christmas loan or your holiday loan due to excessive interest rates or short repayment terms, you risk making matters worse.
- A payday loan? – Be careful, especially if you’re wanting to borrow £500 or less, carefully review the terms of any loans you’re thinking about taking out. The offer can actually be identical to a payday loan, which might have fees that have an APR of more than 100%. It’s recommended to avoid considering this kind of loan unless it’s an emergency and have no other options, because of how much it could affect your financial situation in the long run. Check out more on payday loans here.
A missed payment might hurt your credit score! While paying off your loan can help to raise it, and sometimes it can leave some stains in the long run, so be extra careful when taking out a loan. If you miss on paying your loan, this could impact your credit score over the long term.
Some benefits of Christmas loans…
Every loan has its pros and its cons, for every action there is an equal and opposite reaction… The same universal theory applies to Christmas loans and holiday loans.
Here are some of the benefits:
- Prequalification – You can prequalify with some lenders with a soft credit check, which won’t have an impact on your credit scores. You can reduce the number of lenders on your list and compare multiple offers by submitting a single prequalification application. LoanTube always performs a soft check, we make sure to never harm your credit profile. .
- Monthly payment – Christmas loans and holiday loans are installment loans, which means that they have a set timeline and monthly payments. This means that over a certain period of time, you will be required to make monthly payments. Make sure you can afford the payments and include this in your budget planning.
- Interest rates – Personal loans typically offer lower interest rates than credit card interest rates, depending on the terms of the loan and the state of your credit profile. To determine whether getting a personal loan could save you more money than using a credit card, thoroughly review the conditions and numbers.
- Instant cash is available – If you choose an online lender, the application and funding processes are typically quick and simple. You may even receive your loan the same business day if you are approved, giving you extra time to get ready for the holidays. More on that later.
So, with holiday loans and Christmas loans you know exactly how much your loans will cost and when your payments are. They are also flexible loans where you can either repay early or take a little extra time to pay, although some lenders may not be as flexible as others and can report your miss-payment or delayed payment to credit reference agencies which can actually hurt your credit score… To prevent that, find a lender that does a soft credit check to check your eligibility and have flexible terms, LoanTube specifically does soft checks so they don’t hurt your credit score.
Where can I get a holiday loan?
Many banks now provide online loan applications, and many offer low rates and benefits for current customers. The best rates at a bank are most likely to be available to borrowers with excellent credit.
If you have strong or exceptional credit (a score of 690 or better) and you already have an account with the bank, you might want to consider getting a personal loan from them.
Some banks may require you to apply in person, and not all banks provide personal loans. So, in some instances taking a holiday loan or a Christmas loan from your bank can be a good option.
Typically, credit union loans have flexible periods, modest minimum amounts, and maximum rates that are at or below 27%. Credit unions have the ability to take into account facts other than a credit score, therefore borrowers with fair or bad credit (scores below 690) may find favorable rates when compared to other lenders. However, applicants must be credit union members.
You must fulfill the credit union’s standards and sometime pay the one-time membership fee in order to join. If you’re already in a credit union, you can carefully examine if it is the best option for you when it comes to taking holiday loans or Christmas loans.
Online lenders offer holiday loans and Christmas loans to consumers with all types of credit scores, and they may frequently finance a loan within a day or two of your application. APRs on loans from online lenders can reach up to 99%. Your credit score, credit history, debt-to-income ratio, and income-expenses all play a role in the rate you are eligible for.
Rates for personal loans from online lenders can start at 8%, but to be eligible for the lowest rates, you must have a decent to exceptional credit score.
More on benefits from online lenders and loan comparison later.
Holiday loan and Christmas loan alternatives…
Here are some alternatives that you should know about when it comes to Christmas loans, but don’t get carried away, they aren’t necessarily “good”, they each have their pros and cons…
Nothing is perfect and we don’t want to misguide you into taking something you shouldn’t.
An intelligent usage of a credit card might be worthwhile. You might be able to use points or special financing for Christmas spending if you have a cash back credit card.
You might also think about enrolling for a credit card with an introductory APR of 0% on your purchases. If you can find one with a zero-interest introductory period of between 12 and 21 months, you may have enough time to pay off your trip spending without incurring interest. Just make sure you settle your debt prior to the end of the promotional period.
No matter how high your credit limit may be, it’s a good idea to only make purchases that you can afford to make when there is a no-interest introductory period.
This can sometimes be better than taking Christmas or holiday loans, but you should really be careful, missing out on just one payment could be catastrophic.
Buy now, pay later
A number of more contemporary apps have appeared in recent years that promise to make buying now and paying later simpler. A buy-now, pay-later app typically allows you to make purchases by paying a portion of the amount upfront and paying off the remaining balance in installments – frequently without interest as long as the payments are completed on time. This can sometimes be better than holiday loans and Christmas loans, but there is a catch…
As with any form of lending, always check the terms of an app carefully to see if there are any fees, interest or other charges to be aware of. Some of these buy now pay later offers are merely marketing gimmicks.
A realistic holiday budget
Making a realistic holiday budget can be a wonderful way to keep track of your spending and view both your day-to-day life and holiday expenses in one spot.
Planning out your year in advance to save up as much as possible and have a decent holiday budget is definitely the best option. The only problem here are things that always come up and make you spend more money than you want… Plus during these drastic changes that are happening in today’s world, planning one year ahead is almost impossible…
If you are able to do it, we strongly recommend you do it, but know you’ll have to make certain sacrifices that can leave you with a bitter taste in your mouth. After all, evaluate all those available options and make a rational decision.
A realistic budget and planning can prevent you from needing a Christmas loan or any other holiday loan.
Sneaky ways some credit providers take your money, leaving you with colossal consequences…
Finally, the section that you’ve been waiting for… Don’t worry it is fine even if you just skipped everything and got to this part, just know that there is valuable information that you may be missing.
After all, a tiny little detail can make a huge difference… We want to have you prepared as much as possible. We don’t want you to have a “I should’ve read it all…” moment.
The most common issues with Christmas Loan:
A simple online search for “Christmas loans” could leave you with thousands of websites that claim to provide quick cash. However, a lot of Christmas loans are actually payday loans dressed up as holiday loans. Some of these lenders claim to send you money within 24 hours and often don’t examine your credit.
The problem? It will be well into the triple digits for your APR rate. Payday loans are short term, high APR loans that have astronomical interest rates… Be extremely cautious of them, they are one of the most expensive loans you can get.
You’ll have a few weeks or months to pay back the whole amount borrowed plus interest. If you don’t have the money in your account when the lender requests access to it in order to collect payments, you could be subject to expensive overdraft fees.
You’ll basically be bound by the terms of your lender., They will attempt to charge monthly payments from your account on every payment date , whether you have the funds for it or not…
Avoid using Christmas payday loans to cover holiday expenses if at all possible.
No Credit Check Loans…
This may be the most popular deception overall, not just for Christmas loans or payday loans. The thing is, there is no such thing as a “no credit check loan” and it is one of the most common mistakes people fall for.
How do we know it?
Well, the regulations are very strict when it comes to lending. Lenders HAVE to ensure they are lending responsibly and for this they always perform a credit check before they give you a loan, it doesn’t matter if it is a Christmas loan or a holiday loan…
Heck, it doesn’t even matter if it is another form of a personal loan, lenders are obligated by law to check your credit score and your credit history along with your income affordability… So, those infamous “no credit check loans” are not just untrue, but down right just tricks …
How do you combat that?
Like we previously stated, soft credit check is your go to way when it comes to loan comparison. They are the safest way to find or compare loans and they don’t harm your credit score.
How can LoanTube save you money?
LoanTube is an online loan comparison platform based in the UK. It was created to save people as much money as possible and to protect them from the misleading marketing tactics you encounter every day. Like you’ve previously read, online services are the fastest way to borrow loans. (although we’re not saying you should borrow, we encourage you to always go through your options carefully)
Loan comparison can help you make the best decision when it comes to choosing a loan amongst our partner lenders.
No matter what loan you want to take, comparing loans is often the smartest thing you can do!
Our lenders offer multiple types of loan including Christmas loans or holiday loans. You can check your eligibility rate and instantly compare loans from multiple UK lenders. Our lenders are FCA regulated, they are responsible and they perform soft checks only, because protecting your credit score is very important for us.
Although we can’t guarantee we’ll find you a lender, you really do have better chances of finding a suitable loan with us because we work with multiple UK based lenders.
Comparing loans with us is done in three simple steps and you can finish everything in just a few minutes, getting the best deal out of all deals our lenders offer…
This is possible because the internet is extremely fast and extremely efficient, our state-of-the-art methods utilise and amplify the power and speed of the internet to find you loans as fast as possible.
Comparing loans can potentially save you hundreds of pounds, depending on the loan you want to borrow. Without further ado, you can check your loan options and use our modern loan calculator to search through holiday loans or Christmas loans.
To start your application for a Christmas loan, please click here. Remember that our service comes at no charge to you and that you don’t have to accept the quotes we provide you with if you don’t like them.