What is a Short Term Loan?
Short term loans are a quick solution to the financial problems that you might be facing. They are known as payday loans or quick cash loans when they are for very short periods.
They are intended to be used for a short period of time and are typically repaid in 4-6 weeks. Long term loans are for those who need to borrow money for a longer period of time, like 6 months, 12 months or more. Generally speaking, the longer loans will come with lower effective interest rates but might end up costing the borrower more over time. Despite the lower rate, interest will be adding p for a longer period.
The Pros and Cons of Short Term Loans
Short term loans can be a useful financial tool for many people. But there are also some risks that you should consider before taking out such loans.
The Pros Of Short Term Loans
Quick access to funds: You can get the money quickly and use it for your needs. If your loan is for an emergency, which it probably is, this is crucial.
Flexibility: These loans can be used for any purpose and the fund quickly. in most cases, the loans will fund at least by the next business day which allows you to handle your issue fast.
No collateral necessary: This means that you don’t need to provide collateral or put up anything as security when taking out a short term loan. This makes the loan simpler and streamlines the process.
The Cons of Short Term Loans:
High interest rates: Interest rates on short term loans are usually higher than regular loans, which makes them more costly over time. This is because this type of loan is generally riskier for the borrower due to the lack of credit investigation.
Limited options: Less companies offer short term loans so your selection of local lenders is limited. More online lenders are available however and that helps to make up for this issue.
How to Get a Short Term Loan
If you are in a financial emergency and need money quickly, you can apply for a short term loan online or through a local lender. Online loans are generally quicker to apply for but local lenders may be able to get you money the same day.
If you have bad credit, it will be difficult to get a short term loan or you may have to pay higher fees and/or interest. You should try to improve your credit score before applying for any type of loan if time is not an issue.
If you are trying to get a quick cash infusion, there are many lenders that offer short term personal loans with flexible terms. Simply choose a lender and fill out an online application. Most decisions will be made quickly and you can then rest easy knowing that money is on the way. On the way often will mean the next business day.
The Best Ways to Pay Off Your Short Term Loans
The best way to pay off your loans early is to cut up your credit cards. Revolving debt is too tempting to use, so destroying the physical card will keep you from charging when you should be paying. If you have the number memorized, report the card lost and get a new number.
The next best way is to find a job that pays well and get a raise. Easier said than done, but it is very possible, especially in this economy. Keep in mind that employers are looking for talent and willing to pay for it. You would think that they would reward current employers to maintain them, but this is not how it works. If you want the big raise, you need to change jobs.
Another way is to negotiate with your loan provider. They may be able to lower interest rates, especially if you have been paying on time.
If you are serious about paying your loans off, you should take an aggressive approach and try to implement these methods. They work, but they do take motivation and some discipline.
The Dangers of Short Term Loans
Before we leave, let’s take one more second to discuss the dangers of the short term loan. Yes, they can be used to handle a money problem but they come at a high financial cost.
Short term loans provide quick cash, but they can also put you into a financial hole.
It is important for people to be aware of the dangers of short-term loans before taking one out. If you are struggling financially and need some extra money in a hurry, it is best to try and find a more affordable solution like a loan from a friend or a sale of property.
Most people know the dangers of taking out a short term loan such as payday loans, car title loans, etc. The problem is that the stress of an emergency can make people discard reason. You need to solve an emergency fast, but a few minutes usually will not hurt. So, before you commit to a short term loan, take a few minutes and ponder the alternative. If you need a quick 800 dollars, can you sell something instead, defer a car payment or negotiate the cost of the bill.
investigate all options before agreeing to high cost loans.