You never know what’s just around the corner, which is why it’s important for your finances to be in shape to deal with every eventuality. But if you’re struggling, there are ways that you can have access to funds to help you deal with an emergency. Short-term and payday loans offer money in your account quickly, to help you deal with unprecedented costly expenses. We’ll take a closer look at what these loans have to offer below, and the pros and cons so you can weigh up your decision.
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What is a Short-Term Loan?
As you may be able to tell from the name, a short-term loan is a sum of money that is repaid in a short amount of time, typically from as little as a month to a year depending on your lender. They are offered by online lenders and are particularly helpful if you need money quickly or if you’re dealing with an emergency. A good example of a short-term loan is a payday loan – these loans are used to help the borrower make it to payday if their income won’t stretch that far. They are then typically paid back within a month. There is a range of short-term loans you can choose from, with varying repayment requirements to suit you.
What are The Benefits?
So, if you’re thinking about applying for a loan, knowing what the advantages are can be a huge help when it comes to making your decision. Whilst short-term loans should only be used if you’re faced with an unprecedented expense, there are a few benefits that come along with them – we will look at them in more detail below.
This is one of the benefits that make short-term loans stand out from the likes of traditional, bank loans. The application process is based online, which means it’s accessible to almost everyone. The process itself is simple, and all you need to do is ensure you provide a few necessary details, like proof of income and employment, and proof that you have a bank account to name a few. Because short-term loan lenders are based online, you can get help with your application should you need it.
Based on Affordability
Even if your credit score is not the best, and you’ve struggled to manage your money in the past, you may still be eligible for a short-term loan. Online lenders that offer these loans base their decisions on whether you can afford to repay the full amount over the agreed period – this makes your credit score less of an issue. Of course, improving your credit score is always a good idea so that you can benefit from lower interest rates, but if you need money quickly, this may not always be possible.
If you’re faced with an emergency, like a broken boiler, or an urgent car repair, you’re going to need money as quickly as possible so you can deal with the issue. Short-term loan lenders can offer money in as little as 24 hours after your application has been submitted if you provide all the information required, allowing you to deal with the issue you’re facing quickly and easily.
What are The Disadvantages?
Whilst short-term loans can provide help when you need it most, there are also a few disadvantages that you should think about before making your decision, here are a few examples to be aware of.
- Expensive: Although short-term loan lenders offer smaller amounts of money, they can turn out to be more expensive, as interest is high and other hidden fees may be applicable. It’s always best to ensure you know the total cost of borrowing before applying.
- Small amount: Unlike bank loans, these short-term loans only offer small amounts to help you, this is so that they are affordable, and you can ensure repayment. They shouldn’t be used as a long-term solution.
You will need to pay your loan off quickly and depending on your lender this could be anywhere from a month to a year. It’s essential that you make sure you can afford frequent repayments in a short space of time without putting your finances at risk.