It’s the season to be jolly – yet many people worry when the occasion hits. With gifts, decorations, and sweets to buy, Christmas expenses are £719 on average. A Christmas loan is one way to spread the loan cost. It takes all the worries of missing out on important preparations.
You don’t need to see the dull children’s faces. Instead, you can surprise them with the most anticipated gifts. Loans for Christmas celebrations grant one an opportunity to rationalise every deep-seated wish. The blog lists how these loans may help you navigate every financial trouble in a jiffy.
What costs do Individuals struggle with during Christmas?
The rising costs of essentials are one thing that makes it challenging for natives to deal with. High food costs affect the bills. According to studies, an individual can only pay £275 extra (if necessary) on groceries/ food. It is because of the high inflationary blows.
Budgeting for Christmas becomes challenging with pressured incomes. Around 53% individuals are concerned about financing their shopping needs. Moreover, 44% individuals plan to use Buy Now Pay Later” ways to finance the requirements. It will take over 6 months to repay the debt in that case. It is the reason individuals wish to keep Christmas a low-key affair to avoid the financial strain.
What is a Christmas loan?
A Christmas loan is an unsecured way to finance any occasional needs. One may get up to £10000 unsecured to finance the needs. The terms and interest rates stay competitive due to the lack of security involved in the loan. One can use the loan for any purpose, like buying sweets, clothes, a Christmas tree, sending gifts, home renovation and decoration.
The loan is repayable in fixed monthly instalments over the loan period. You can budget for the payments and pay them easily. The loan for Christmas is especially ideal for individuals who failed to save enough throughout the year. At the same time, they may not want to miss important moments.
You can use a loan calculator to define how much you can qualify for. It helps you know the approximate costs, if not the final ones.
Benefits of applying for a Christmas loan with bad credit
If you are someone with a bad credit history, you may benefit from a Christmas loan. Apart from helping you spread the cost of celebrations, it improves the aspect even more. Here is how you may benefit from this:
- Get access to funds despite bad credit
Yes, you may get Christmas loans for bad credit from a direct lender despite a low credit score. It just requires you to have a consistent income and improved finances. Some loan companies deal with profiles with poor credit history. It thus helps you get better terms than traditional providers.
- Help improve credit score
One of the best benefits of getting a loan with a poor credit history is the opportunity to build a credit score. You can undo the mistakes and repair your credit history slowly by making consistent loan repayments. It reduces the impact of past debts and helps you fetch better terms in the future.
- Fixed repayments help with budgeting
You may generally get a loan for Christmas celebrations with fixed instalments and interest rates. It helps you save money on unnecessary aspects like paying penalties. You always know how much you need to pay with a fixed term and transparent loan agreement. Thus, this reduces the chances of loan default and financial mismanagement.
Potential Risks of Christmas loans that you must check out
Every loan comes with pros and cons, and so do the Christmas loans. It could be a great way to cover for important occasional needs. However, these come with high interest rates, which may prove troublesome if you default. Here are other risks that you should know:
- High interest costs
Competitive interest means paying more overall on the loan. You may face a high APR compared to personal loans or someone with a good credit history. It is thus advisable to improve finances and credit score before applying. Analyse the amount requirements and use a loan calculator to understand how much you can get. Apply accordingly.
- Affordability still matters the most
Every loan provider conducts affordability checks to determine whether you can repay the loan comfortably. If not, you may not get the loan. It is an important part of the loan application process. You cannot skip these basic affordability checks. It is important for your and the loan provider’s financial interests.
- Risk of debt rollover
Most individuals find themselves in a huge debt trap after Christmas. However, it is mostly the credit card debt that one struggles to repay. Alternatively, you can manage and avoid Christmas loan debt rollover by contacting the provider directly. It helps you know the possibilities of halting the payments or paying less than what you are paying on the loan.
- Damage to credit score
Most individuals contact a direct lender for loans for bad credit during Christmas. However, they skip reading the terms and don’t understand the repayment structure. It could be due to the hurry or starting the preparations. This casual attitude may affect the loan payment structure and ultimately the credit score. In worst cases, the damage takes time to recover. Hence, always talk it out with the creditor if you cannot pay.
- Not a substitute for savings
A Christmas loan helps you spread the cost of a purchase, preparation, and celebration. It does not mandate you to depend on the loan itself for every small, occasional need. Instead, you should try to build up savings and meet needs from that accordingly. The loan acts as an alternative, not a necessity, to fund the goals.
Bottom line
A Christmas loan can be beneficial for someone who cannot save enough. However, you must ensure a responsible and careful use of the same. If considering one, make sure to compare the loan APR, check whether you can afford the monthly payments, and whether you can repay early. It helps you choose the right loan option.
