If you find yourself in a financial emergency, you may not know what step to take next. While some people can rely on their friends and family to help them out, others decide to investigate short term loans. In simple terms, a short-term loan is where the amount of money you borrow (and the interest) is paid back in less than 12 months.
While there are many advantages of a short-term loan, you can find yourself in crippling debt if you don’t adhere to the loan’s rules and regulation. To help make your mind up, here are the pros and cons of short-term loans.
Pro – Fast
One of the biggest pros of a short-term loan is how fast and easy the application process is. Many loan providers state that their money can be within their bank account within a matter of minutes. All you need to do is fill in basic details about you and your financial background and you could receive money instantly.
Pro – Acceptance Rates
It’s much easier to be granted a short-term loan than it is for a car payment plan, mortgage, or a longer-term loan. Many consumers face little to no difficulty being accepted for a short-term loan, unless they have a very poor credit score.
Pro – Flexible
When taking out a short-term loan, there is lots of flexibility that comes with it. If you apply for a payday loan, you can outline what specific date you can pay the loan back. Most lenders will give a timeframe of 36 days for you to pay it back. This means that you will have more flexibility, which can help you find a short-term loan that matches your requirements.
Con – Potentially Expensive
When compared with a traditional loan, a short-term loan can have interest rates that begin in the teens and stretch through to several hundred percent. If you’re struggling with your finances, the interest rate on the loan may be out your depth. Should you take out a loan, you may have great difficulty keeping on top of the repayments, which could send you further into debt.
Con – Difficult to Validate as Genuine
Alongside the high interest rates, it can be hard to validate the lender you are working with as genuine. With so many short-term load providers on the internet, there will be some who have bad intentions and may scam you out of money. If you’re looking for rapid cash Gresham, it’s best to conduct research into customer ratings and reviews so you can be confident that your details are kept safe and secure.
Con – Shows on Your Credit File
While borrowing money and paying it back on time can improve your credit score, your credit file will display that you have applied for a short term loan (regardless of whether you get accepted or not). This can have severe consequences later down the line if you want to take out a mortgage or get a credit card.
If you’ve weighed up the pros and cons and decided that a short-term loan is right for you, make sure that you look into the rate of interest, hidden charges, and repayment structure to avoid any nasty surprises.