Before you take out any type of loan it I always a good idea to ask yourself whether they will be right for you. It is no good making this decision in a final way though. This is because our financial situation will change over time and we will have different needs. Therefore, even if something is not right for us at the present time, it may work for us in the future or may have worked for us in the past. Therefore, it is a good idea to have a good understanding of what loans are available and how they work and then we will be able to make a decision as to whether they suit us at certain points in time.
What are Short Term Loans?
With a short term loan you will usually be offered the opportunity to borrow a small amount of money. This tends to be between £100 and £1,000 which means that it is a good loan to use if you need a small amount of money. There are some lenders which will only lend higher amounts and this can mean that you end up borrowing more than you need which means that you have more to repay and this can make it trickier to cover all of the repayments. Therefore, having a smaller loan can be easier in a lot of ways.
The lenders will also not insist that their borrowers have a good credit rating. They do not look at the credit rating of their borrowers which means that whether you have a good or bad one it means that it will not matter whether you are accepted for the loan or not. This can be handy as if you have a poor credit rating, it is unlikely that you will be accepted for other loans.
The loans are also quick to arrange. You could find that some lenders will be able to organise the loan within a few hours. This means that if you need money in an emergency they can be extremely useful. You may even find that some lenders will be able to send money outside of normal banking hours which could be really helpful too.
The loans do not last very long at all. You will find that with many short term loans, you will only borrow the money for a few weeks or even days. This is because they are repaid on your next pay day. Therefore, if you are very close to that day, it will not take long until you are free of the loan again. You will normally have to repay everything you borrowed and the interest and fees all in one go on that day. However, you may find that some are instalment loans and this means that you are able to repay over a series of months. This can be more expensive but it is easier to manage so is worth considering.
When Are They Useful?
Therefore, if you have a poor credit record then this sort of loan could be handy. It is likely that you will not be able to borrow using a traditional loan and therefore your options will be much more limited. This means that in this circumstance you may need to look at the short term loans as a borrowing solution. If you only need to borrow a small amount of money, then this sort of loan could be better for you as well. If you need money quickly, then this could be a useful solution for you as well. Lastly, if you want a loan that will not last very long then these could be good as well.