You may not have come across short-term loans before and if you have not, then it is a good idea to find out how they work. This is because they are different to other types of loan and you never know when you might need to borrow money and pick a loan. It is so important to make sure that you pick the right loan to suit your needs and so unless you know about all of the different types of loans, you will not be able to do this. Therefore, make sure that you do the research as soon as you can as you never know when you might need the information.
What is a Short-Term Loan?
A short-term loan is a loan where you will borrow money for just a short amount of time. Usually you will need to repay all of the money that you borrowed as well as the interest in one lump sum when you are next paid. This means that the loan will tend to last only a few weeks if not a few days and so it really is short compared to most other types of loan.
The lender will tend to be online and it is normally the case that you will apply over the telephone or online, although there will be some that will have high street branches. It is easy to apply and it will not take long to do so either. These lenders will not be the familiar ones that you se eon your high street selling mortgages and personal loans though, they tend to be specialists in this type of lending and so you may not have heard of them.
How Does it Differ From Other Loans?
One of the main differences is that short term lenders tend not to be interested in your credit score. They will not worry about your credit history but will lend to most people that fulfil their minimal criteria. This means that people that generally get turned away for loan, will be able to borrow using a short-term loan.
The amount of money that you can borrow tends to be relatively small as you tend to be able to have between £100 and £1,000 available to you. This is less than many loans but it does mean that it should be easier to repay as there is less to find.
What are the Advantages?
These loans are arranged really quickly. The lenders set them up to be able to provide money for emergencies and it means that they know how important it is that the money is available really soon after the loan is applied for. This means that there are some lenders that are able to get the money to the borrower within a few hours. Some are also open outside of normal banking hours, so at the weekends and during the evenings, which means that they will be able to provide money at any time, which can be handy for some.
Not being able to borrow much, means that it is not so easy to get out of control with the debt. It will be easier to repay because it is a lower amount of money and that will be good.
The fact that you do not need a good credit record to borrow the money means that the loan is more open to everyone. It allows those people that are not able to borrow elsewhere to be able to get money in an emergency and can therefore be useful if they have no where else to get the money that they need.