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What You Need to Know About Getting a Short Term Loan

What is a short term loan?

There are different types of loans that can take care of different needs and purposes. Long term loans are borrowings that have longer paying periods such as car loans and home mortgages.

Short term loans, on the other hand, are exactly the opposite. The amount given for short term loans is typically smaller thus the repayment period is also shorter. Unlike long term loans, a short term loan can be obtained within the same day as the loan application. A short term loan can also be obtained by borrowers that cannot acquire a loan from traditional banks and lenders.

Should you get a short term loan?

A short term loan can help you cover unexpected expenses or financial emergencies. For borrowers with poor credit, it is sometimes the only available and viable option.

Many of us try to save some money for unplanned expenses, but sometimes even with a well-managed budget, there are some situations that require more money to settle than what is in our savings account. When you stumble upon a medical bill due to an illness, or a bill that needs to be settled immediately, waiting for your next paycheck is not an option.

Where can I use the funds from a short term loan?

Practically anything. It is not advisable to use it to repay or consolidate other debt since the loan amount usually has a maximum of £1,000, depending on your affordability.

Ideally, if you want to replace a home appliance, you should first save the money that you will use to buy the item outright. But sometimes an essential item in the home bids goodbye, when you’re not ready so the best step to take, is to get a short term loan.

How can I qualify for a short term loan?

There are certain requirements that you need to meet in order to become eligible for a short term loan. The usual requirements include your source of income, proof of employment, and valid identification documents. You also need to be of legal age in order to be allowed to get a loan.

If you are fortunate to have a good credit record, you may be eligible to get a loan from a mainstream lender or a bank near you. However, if your credit score is not that good or you haven’t built a credit history yet, your best option is to go to a reputable online lender.

Borrowers with poor or zero credit have fewer chances of getting a loan from a traditional lender. Conventional financial institutions are wary of borrowers with poor or nonexistent credit histories. It raises a red flag that they may not be able to reclaim the money that you owe from them.

Online lenders are more open to borrowers with different credit reputations. However, you should also know that interest rates of short term loans are normally higher than the ones offered by mainstream lenders and banks. The higher interest rates serve to offset the risk of the lender in lending money to a high-risk borrower.

A short term loan is an effective tool in helping individuals handle sudden financial difficulties. Another advantage of getting a short term loan is that it can help you improve your credit score if you are consistently on time with repayments. When your credit score improves, you can get access to better and more competitive loan offers in the future.

Should I have a guarantor to get a short term loan?

Short term loans are different from guarantor loans since the latter requires the loan applicant to secure the loan through a third party who will be willing to become responsible for the loan on your behalf. Once a borrower is late for payment or fails to settle the loan, the guarantor is obliged to take care of the loan payments.

Choosing a Provider of Short Term Loans

There are numerous short term loan providers online, thus it makes perfect sense to spend time researching if a potential lender is trustworthy and reliable.

  • The provider should practice responsible lending. The lender should never offer an amount larger than what you can afford to return.
  • There should be no hidden fees. The lender must be clear and transparent when it comes to fees and charges.
  • The company must have an efficient customer service team.
  • The lender should not require collateral or a guarantor for the loan.
  •  The lender must be able to transfer the money immediately to your account once your loan is approved.

Short Term Loan Benefits

A short term loan has several benefits and these will give you enough reason to apply for one:

  • Money in your account in an hour or so
  • Manageable payment installments
  • No guarantor or collateral required
  • Flexible loan amounts, from £100 up to £1000
  • Improve or repair your credit score when used properly

Short Term Loans are Safe and Effective Financial Solutions

There are always rogue and irresponsible lenders who only want to make a quick profit from their clients. This can be prevented by seeking an online lender who has years of experience in handling short term loans. Remember that every type of loan has its own set of risks. But these risks can be evaded by working only with an established and trustworthy online lender who can give you a safe and effective solution to overcome your current financial dilemmas.