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.