Dent your Savings or Procure a Loan?

Created: 2016-12-01 07:00:00

Anyone who needs some money and doesn’t have any savings to fall back on or doesn’t have someone around who can lend them the required funds will have to opt for some smart loans in UK. Those who have some savings might contemplate against short term loans. At the end of the day, any loan will cost more than using the savings because there is an interest to pay. With unsecured short term loans or smart loans in UK that you might repay in a few months, the interest can be easily a few hundred to several thousand depending on the loan amount. You can save this money if you use your savings.

There is a flipside though. When you rely on your savings, you don’t pay any interest and hence it is wiser. But what if you don’t replenish the savings? There are many people who keep a backup fund, some savings for the rainy days and some kind of financial cushion to help in bad times. These funds are quintessential for anyone and while they should be used at the right time, the funds must also be replenished. You can use your savings and then not contribute to it in months and years to come.

With short term loans, your savings remain intact, you repay the loans because you are obligated to do so and you can still add to your savings after you have repaid the full loan. Since savings is not a legal obligation and lenders of smart loans will not be constantly notifying to remind you of the obligation, you may not save for months while your existing savings have been exhausted.

The difference lies in the obligation. If you think you can use your savings and replenish it just as sincerely and dedicatedly as you would repay a loan, then you can think against short term loans. Else, borrow and keep your savings intact.

Warning: Late repayments can cause you serious money problems. For help, go to moneyadviceservice.org.uk