How do short-term loans differ from traditional lending?

Short-term loans have a few large differences when comparing to more traditional loans. It is a good idea to focus on these and then you will be able to more easily decide whether they might be suitable for you.

  • Very fast to arrange – these types of loans are often extremely fast to arrange compared to more traditional loans. This is partly because they were set up to help when money was needed in an emergency and so it would have no use for a person to have to wait weeks before getting the money. Some lenders are quicker than others and you would expect to wait between a few days and a few hours to get the money put into your bank account. If you do need the money within a few hours, then you will need to make sure that you use a lender that is able to provide that service. You also need to make sure that you complete the application forms properly and send off any documents promptly or else you might slow down the process.
  • Good credit record not essential – with most loans you will need a good credit record. Lenders will want to see evidence that you can be trusted to repay it on time. They will have a look at whether you have repaid loans in the past, that you have decent income and that you are capable of making regular repayments. It can mean that anyone who has struggled to repay a loan in the past or that does not have a regular income or does not pay regular payments will be turned down. However, short-term lenders do not look for this. They will lend to you even if you have a poor credit record.
  • Can be applied for online – often a short-term loan can be applied for online or over the telephone. Some people find this much easier. Some traditional loans still require you to fill out all sorts of complex paperwork. This can be off putting for some people and can put them off applying at all.
  • Can borrow small amounts – often with a traditional loan we have to borrow a large amount. It is often the case that if we want a personal loan we have to borrow at least £1,000 and if we get a credit card we have a credit limit of thousands of pounds. This can be tricky. If we borrow too much money then we will end up paying a lot of interest. We may also find that it is hard to repay and that it will make it very hard for us to manage our finances. Short-term loans will usually only allow you to borrow up to £1000 so it is easier to manage the repayments.
  • Repaid quickly – short-term loans need to be repaid quickly. This means that you will be out of debt quickly too. This can be a great advantage for anyone who does not like the idea of owing money. It also means that you will not pay as much money out in interest compared with a loan that last for years.

So, as you can see there are quite a few features which are unique to short term loans. This means that they do stand out as a different type of loan to the more traditional ones. It is a good idea to know what these differences are. Then if you are in the situation where you need some money, you can think about all of your options and make sure that you pick the one that will suit you the best.

You may think that you will only ever need a more traditional loan. But it is wise to remain open minded. We never know what might happen in the future with regards to our finances and what we might need in the way of loans. If we suddenly need money, then we may be in rather a panic and may not have a lot of time. Therefore, if we have this basic information already, then we will be in a good position to make the right choice. If we rush and do not plan, then we could end up taking out a loan that is not really suitable for us. This could end up costing you a lot of money and it could mean that you struggle with the repayments and you may regret your decision. It is much better to take some time to find the loan which suits you the best and then you will able to have a much more positive borrowing experience and hopefully get really good value for money from it as well. Therefore, the more information you have the more likely it will be that you are bale to make the right decision.

Will Bad Credit Loans be a Good Idea?

When we are thinking about borrowing, it is always wise to have a good debate with ourselves as to whether we think it is a good idea. This is because we need to be sure that we really are taking this risk and paying out this money for something that will really benefit us. Loans can be good or bad and we need to decide whether the loan that we are thinking of getting will be good for us.

Good vs bad debt

It is not always that easy to decide whether the loan we want to take out will be good or bad debt. This is partly because there are different definitions of good and bad debt and partly because sometimes there are unknowns which will have to address.

For some people good debt is something that will benefit us financially and bad debt is something that will not. So, if we take out a mortgage and buy a house, that will benefit us because we will no longer have to pay rent and our money will be going into something that we can later sell and get back. Bad debt would be using a loan to buy a pretty cushion made from gold which we never look at or use. However, if we need to drive for a job, but cannot afford the lessons, should we borrow money to do a crash course before the interview so that we can say we can drive and hope to get the job? This is a big gamble and not easy to assess.

Others would say that a good loan was one that you could easily repay. One that you had carefully researched so that you were sure that you could afford and that you have compared and know that it will give you the best value for money. Again, this might seem straightforward but if your situation changes during the course of the loan you could feel that it was not the right choice after all.

Are bad credit loans good or bad?

As it is tricky to define good and bad debt and sometimes tricky to apply it then labelling a loan with either good or bad is not possible. Therefore, we cannot say for sure either way. However, you can do some things in your specific situation to see whether they will be good or bad for you.

Firstly, you need to think about what you are buying with the money from the loan and whether you feel that it is necessary. Think about whether you can go without the item or wait until you have saved up the money for it.

Calculate how much the loan will cost you and you will be able to work out whether you think that it will be worth paying that much money for it. You should also compare the loan to other types of loan and see whether you think they might give you better value instead. You need to think about the cost of the loan but also about how it works and whether you feel that it will suit you. One thing to be attentive to is the repayments. Make sure that you will be able to afford to repay the loan. If you miss a repayment you will get charged extra fees and this is not good. Therefore, you should be comparing the loans and looking at the repayments so that you can take on a loan which will suit you and allow you to make the repayments of an amount that suits you.

If you do decide that a bad credit loan will work for you then you need to compare the different lenders. You need to think about what you are looking for in a good lender and whether you feel that the lenders you have looked at can provide that. It is not always easy to know but you want to make sure that you get the best value for money. So, you will not want to pay more than necessary for the loan but you also want to make sure that you are not paying so little that the service you receive is not satisfactory. Of course, it is never as simple as this as the dearest loan will not necessarily be the one you think is the best. Think about what you would like to see in a good lender and then match them up to that.

It is not always easy to make decisions like this on our own. It can be worth asking someone else to help us. If you discuss things with them and do the research together you could end up coming up with a better solution. As well as their knowledge helping you, they may also look at things form a different point of view to you and that could be helpful.