Fast cash companies can offer surprising interest rates

With many people finding themselves in difficult financial situations since the crash of the money markets in 2008, unsecured loans offering quick cash are becoming more and more common. Many people are turning to the organisations which offer unsecured personal loans, requiring no collateral and handing out fast cash within a few days of taking out the loan, in order to cover holes in their personal financial schedules. Perhaps the day of the month that rent is due comes a few days before the day when the borrower’s salary comes in, or otherwise a sudden and unexpected expense – repairs to a car, home or appliance, a business opportunity too good to turn down, or the deposit for a holiday or tenancy agreement – needs to be covered with emergency cash. This is the time when borrowers start trawling the internet for cheap loans which they can use to tide them over a few crucial days or weeks, and which won’t cost the earth in interest rates.

It’s the level of the interest charged on loans that makes some people think twice about short term unsecured loans. These types of loans are always quicker and easier to arrange than secured loans, as there is no valuation of the property or ‘security’ to be done, and there’s usually a fairly uncomplicated standard contract. People who take out unsecured loans will often find the money in their bank accounts within a few days of signing the loan agreement, and some specialist ‘emergency’ lending organisations will even make the transfer within a few hours of the contracts being signed. This is great for people who are in a financial emergency. But unfortunately, borrowers can often get carried away with the speed of the loan process, and forget to check the other important factor in loan provision: the level of interest charged on the loan.

This is what people mean when they talk about ‘cheap loans.’ Very few lending firms charge a flat fee for borrowing (the exception is some Islamic financial services, as interest is prohibited under Islam), so ‘cheap’ in this field refers to the percentage of the loan charged as interest. Some unsecured loans can be very expensive, with several hundred per cent interest being charged. However, for those wise consumers who shop around, quick cash can be borrowed on a relatively low interest rate. And the quicker you repay the loan, the less time the interest will have to mount up – so if you take out a fast cash loan, paying it back equally as quickly could mean that you end up paying out very little in interest.

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