Short Term Loans
There are many different kinds of short-term loans on the market. The word short-term simply means that the loan is designed to be repaid quickly. come with Ts & Cs which normally include repayment plans that may last months, sometimes years, and the application process for these loans are a lot more in depth. But short-term loans have a easier application procedure, and one of the most common short-term loans are payday loans. These loans typically have a principal of £1,500 or less, and they are unique because they are typically paid back when you receive your next paycheck. They are designed for those tight spots life puts us in when we need a small amount of cash urgently.
How Do Short Term Loans Work?
The short-term loan concept is you borrow the funds you need and repay it when it’s your next payday. This is why short-term loans are also called payday loans. The faster a one of these loans is settled the better. If you allow the short-term loan to go over a longer period it’ll cost you a lot more. Generally short-term loans are applied for over the internet and the process usually takes minutes. You are virtually straightaway told if you’ve been accepted for a loan and a lot of the time short-term loan providers will send the cash to your bank the same day that you apply. Since short-term loans are sent so quickly they’re handy for paying for emergency expenses that have caught them by surprise or crept up on someone. The idea of a short-term loan is that the funds are borrowed only when it’s required and paid back with interest on the customer’s next payday. Repaying a short-term loan is straightforward. When your payday comes around then the money is taken out of the same account; needing no input from the debtor. While this is extremely practical and helps avoid forgetting to make repayments it does make it especially important that those taking out short-term loans know how much will be taken it will be taken. When the payment date comes around and there is not enough funds in a customer’s bank then they might be subject to further interest and fees, but this does differ depending on the lender in question.
What Can Short Term Loans Be Used For?
If short-term loans are used responsibly, a short-term loan can be a helpful tool to provide assistance during a time of financial need. Nevertheless, if they aren’t used sensibly short-term loans can cause an even worse financial problem.
Responsible Short-Term Loan Use
• To alleviate a short-term cash flow problem
• To prevent getting overdrawn with your bank and incurring charges
• To pay for unforeseen expenses
Inappropriate Short-Term Loan Use
• To cover your living costs
• For extra spending money
• To settle another any other loans
You have to consider your circumstances to make sure a short-term loan will only be a short-term solution. If you find yourself needing more money every time you reapply your loan, then this may not be the right option for you.
Costs and Interest Rates
How long the loan is for, how much you borrow, and whether security was used to guarantee the payment of the loan affects the amount of interest you’ll be paying on your short-term loan. It’s important to bear in mind, however, that the interest you’ll pay on a short-term loan that lasts for 6 months won’t cost you as much as what you would pay on a five year or ten year loan. Though it’s nice to have a low interest rate, having a much shorter loan term and a high rate of interest can be better.
Who Can Apply for a Short Term Loan
• Are you above the age of 21?
• Are you in full time employment and making around £650 or more per month?
• Are your wages paid into your bank?
• Has you bank account got a debit card?
If you’ve answered yes to all these then you’re eligible for a short-term loan from the majority of short-term loan lenders, subject to their assessment of affordability. So if you are short of cash, wishing away the weeks until your next payday, apply for a fast and simple short-term loan online.
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