Imagine that you are late for work. You step outside your house and there on the road is a high-end sports car, door open and keys dangling in the ignition. Do you get in? Or perhaps you think it’s too big of a risk – for you have never before driven a sports car – and prefer to get the slower but less risky public transportation? You will get to your destination in the end, but you will have to be patient.
Analogies of this sort have been made before in regard to short term loans; if you know what you’re getting into and think you can handle it, then perfect. However if you’re worried it’s too dangerous and that you might spin out of control, then perhaps step back and consider other options.
The pros
Money, money, money. You need it fast and you need it now. With a short term loan, chances are you’ll get it. Figures vary from company to company, but amounts receivable are likely to be higher than you would imagine, though there is commonly slightly less available for first time users, typically half the amount.
Unlike waiting for a bank loan, the process for short term loans is relatively painless. No paperwork and severe interrogation, as the procedure consists of filling out the quick online form and you’re on your way. The requirements normally being just your contact information, bank account and current work status.
Credit checks? Forget about it. Even with an atrocious credit rating, users can still apply for a loan, most commonly titled a ‘bad credit loan’. Companies contain their own verification and automated scoring system, which will determine whether you have been approved for a loan. The results are likely to be given within 5 minutes, so little impatient finger tapping is required.
The considerations
As stated before, amounts for first time users aren’t much to shout about. And short term loans are not surprisingly, for the short term, meaning you’ll have minimum two weeks to pay back what you borrowed. And then there’re the fees. These kinds of loans are associated with a high interest rate, ranging from 12% to 28%. Fail to pay it back in time and you’ll find yourself with late fees and likely to echo negatively on your credit score.
Final word
Short term loans have been and will be around for many years to come. Sometimes you simply need money fast, so if you’re certain you’ve got the know-how and means to pay it back, then jump in that high end sports car, if not, then no harm in getting the public transport either.
PayDay loans are getting a lot of bad press at the moment in the UK media and regulations have been introduced which will apparently reduce their lending by up to 90%. However, as a result of that some people are concerned it will lead to the resurgence of loan sharks, coming in to fill a gap in the market. Surely that suggests a useless banking sector though, doesn’t it?
Myles Money recently posted…Peeing In The Shower
If you have a high credit score – which is ideal – you can get short-term loans for as low as 6 or 7%. Again, you need high credit but I think it’s important to point out that not all short-term loans have super high interest rates.
DC @ Young Adult Money recently posted…4 Ways Confidence Increases Earning Potential
I’m not a fan of any kind of loans even if they are short. I haven’t heard good things either about these places that are handing out loans the same day you walk in.
These loans often come with some pretty high interest rates. Payday loans can have APRs in the 400-100% range. But for those in the military the APRs are maxed out at 36%. I’ve got a list of payday loan alternatives for those who are interested in avoiding those super high interest rates but aren’t in the military.
Thomas recently posted…300+ Places To Donate Plasma For Money
For me, this is really the first thing you should ask before ever considering on taking up loans. But this is just me.
I can see the advantages a short term loan can have to get someone by until they can get going. I like that you included considerations to be considered for the potential drawbacks. Thanks for the helpful loan advice.