All About Financial Planning – What Are Short Term Loans?

October 20, 2011 by  Filed under: Loans 

When the need for many arises, and this happens quite often nowadays, people turn to lending companies or banks in order to secure a loan. Among the many kinds of loans that people make, one of the most sought after are short-term loans. By the word “short-term” this type of loan is paid within a short period of time. This is quite helpful for people who seek to have a way to make ends meet just until their payday arrives.

There are different kinds of short-term loans available nowadays. You can get one from different lending companies through the internet or you can get one from a bank that offers this kind of service. Since this loan only deals with small amounts to be paid in a short period of time, the approval is quite faster compared to long terms loan which can take days to several weeks to get an approval. Short term loans can be processed upon application or within twenty-four hours.

Also, another advantage of this type of loan is that they often don’t require any credit check. Even if you have a bad credit score, most lending companies will still allow you to get a loan provided that you have presented them something that ensures that you are earning money. By having a constant source of income, the lenders will believe that you will be able to repay your debt. However, if you are planning to get a short-term loan from the bank, they will go over your credit score. They may also require collateral depending on the amount of money that you are borrowing.

It is also quite easy to get a loan of this type. You can do it in the comforts of your own home by visiting different online lending companies that can offer such. You will only need to fill up some information necessary and your application will be processed almost immediately. Thick documents and other paper works are no longer necessary.

It is quite useful, especially during emergencies where quick cash is needed. It also has its own setbacks. One is the high fees that come along with it. If you have borrowed an amount of a $100, you will need to repay the principal amount plus the interest rates and other fees which often reach about 30-40% of the borrowed money. For the $100, you will need to pay the principal amount plus $30 – $40 more. That is why short-terms loans are not highly recommended, except for cases when the need for cash is really urgent.

There are several types of short-term loans which you can apply for depending on your needs. There are loans that are designed to assist students in their financial needs while being in college. Another type is a payday loan. This type of loan allows you to borrow an amount of money and pay it back on your next payday. Often, the period of the loan is from 15-60 days, depending on the policy of the lender.

Willie Rhoades is a finance analyst who enjoys writing about short term loans UK and UK loans as well as other related topics.

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