Warning: late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Warning: late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
May 30, 2019
Short term loans can be a great option for seeking out and obtaining funding in certain situations. There are both advantages and disadvantages to this type of lending, and both have to be considered before a decision can be made. Depending on your situation, this type of loan could be exactly what you're looking for.
There are several characteristics that differentiate this type of loan from others. The first, and most obvious is the short time span for repayment. On the high end, the longest terms run at 2 years, but generally these loans are required to be paid off within a year of their inception. Anything longer than that is considered to be medium or long term.
You'll get your answer from a short term lender much quicker than any bank lender. Because banks are much more highly regulated, they need to jump through more hoops than other lenders. But, although they're much quicker than banks, you probably shouldn't expect to get an answer back on the same day you apply online. Typically, the next business day is when you'll hear back from your online application. If you're going in person, you might actually be able to get an answer that same day, but it can vary from lender to lender.
Along with your application for short terms loans, you might need to provide such things as:
Although it still operates as a loan, this is actually considered a cash advance. The lender provides the borrower with the required amount, then the borrower proceeds to make loan payments.
Almost like using a credit card, a line of credit has an upper limit that can be tapped into whenever necessary. Payments on these types of short term loans are made on whatever amount is still owing, so they may vary month to month.
Often viewed as an emergency last resort, payday loans are fairly easy to obtain borrowing that will generally be high in interest and extremely short in repayment terms. Sometimes payments are made by the borrower, but it can also be arranged where payments are automatically withdrawn by the lender from the bank account of the borrower.
Let's take a look at some of the advantages this type of lending offers:
Because you're paying things back in a shorter amount of time, you're not paying interest for as long as another type of loan. So, even if the interest rate is higher, you're not paying it for the same period of time.
Borrowers can get the funds you need faster because the terms of the loan are much shorter. This makes short term loans less risky than long term, because of their shorter maturity date, where they're due to be paid back much more quickly.
If you've got a less than perfect credit score, short term loans may be one of your only lending options. They are much easier to acquire for people who have had troubles with credit in the past, because the requirements to obtain them are much more manageable to obtain.