What Are the Different Types of Short Term Loans?

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Budgeting is one of the first rules of regaining control of your finances, as is saving for a rainy day. Often though, even after controlling your spending, there still isn’t enough left to save. All of which means that if you are hit with any unforeseen expenses, then that rainy day can become a thunderstorm with no let-up in sight. And although ideally, life wouldn’t throw unexpected expenses at us, when it does, taking out a loan is often the only way to meet urgent costs.

So what kind of short term loan might you need? Firstly, this will depend on your situation. If you’re employed, and have bad credit, then payday loans may be the only option. This will see you through until your next pay cheque. However, if you don’t pay off your loan in time, and instead agree to ‘rolling over’ the loan to the next month (as many payday loan companies allow), then a small debt can very quickly become a huge debt.

So short term loans should always be thoroughly researched, and it’s wise to follow these tips before committing to a short term loan.

Consider your Options: An unexpected expense such as a broken washing machine, bill, or car repair, can be a disaster. But before panicking and agreeing to a loan, ask yourself if you can avoid the expense until you get paid. If not, then consider borrowing from a friend or family member first. This way you will avoid any interest costs and loan administration fees.

Bad Credit Short Term Loans: A short term loan is also an unsecured loan, so you don’t need to offer any assets to the lender as security against defaulting. However, for this reason, bad credit loans are always more expensive than secured loans. A lender has to trust you enough to repay, so a poor credit report will go against you. So to apply for a bad credit short term loan, you will need to find a lender who will accept a poor credit record.

Credit Scores and Short Term Loans: Responsible lending is about seeing whether a customer can afford a loan, and so reputable lenders will often make a credit check. However, some are stricter than others, and so a poor credit record doesn’t mean to say you will necessarily be rejected. P2P short term lenders will sometimes take a more sympathetic view of your credit record. For this reason, you will need to find for a short term lender who doesn’t expect a prefect credit history to successfully apply for a loan. However, it’s important not to apply too many times for credit if you already have a poor credit score, so make sure you do your homework first, and do a thorough online search for bad credit short term loans. Then check their websites to see if they will accept an imperfect credit history.

Finally, remember that although a short term loan might get you through an emergency, it’s really important to look at ways of increasing your income to avoid debt becoming a way of life.

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