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As with long term loans, short term loans can be useful when it comes to the diverse personal and business needs of borrowers. Lenders create different short term loan types for this purpose, and for developing investment potential and market competition.
Short term loans take on varying forms and may include:
Borrowing money from friends and family may be the most economic means of lending. This is because family members are unlikely to charge you interest! However, not all individuals will be fortunate enough to have such opportunities available to them. Friends and family might not be in a position to lend money, even if they want to.
You may therefore need to weigh up the other options available to you. Each come with pros and cons, such as ease of access and interest rates. There are also loan alternatives to consider too.
One alternative to a short term loan is an overdraft. But bank overdraft facilities may depend on credit-worthiness and account history. People with a weak credit history may not be able to get overdraft facilities and may look for cash infusions elsewhere. Emergency or bridging loans provide cash to meet monthly bills, before you receive your wages or salary. These loans may have high interest rates and charges though, so bear this in mind if you’re considering an emergency loan.
Those with high credit-worthiness may be able to obtain bank loans with favourable rates and terms easily. Those, however, who lack credit history or have weak credit worthiness, may not be eligible. My Financial Broker offer bad credit loans intended for people with a poor credit history, meaning you can cover an unexpected expense quickly and conveniently.
There are a few types of bad credit loans, such as payday loans and guarantor loans. A payday loan, as the name implies, is where you borrow money until your next payday, and then repay it, along with any interest applied. The latter is where a credit worthy individual acts as security for the borrower. If the borrower is unable to repay the money, the guarantor will pay it instead.
Another option for borrowers are peer to peer loans, which are a relatively new social lending option that connects lenders and borrowers directly.
Whatever form a short term loan takes, there are certain common aspects, such as:
A personalised short term loan quote from a bank or credit institution can be recorded on your credit file. The same is true for short term loan applications. However, with some quotes or applications, only a soft search is carried out, which means it’s not reported on your credit file. With peer to peer loans, it’s worth checking the small print – some applications will be reported, while others won’t be.
By law, loan APRs should be clearly advertised. The loan APR for the amount and duration, and any additional charges, makes all the difference to how interest compounds and the final total amount of monies repaid for borrowing. And requesting a breakdown from the short term loan provider enables you to make a thorough comparison of short term loans on the market.
Extending a loan’s repayment duration, lowering monthly repayment amounts, or defaulting on repayments during the course of the loan can raise loan costs.
Comparing loans, so that you find the one that best suits your needs is crucial. When it comes to short term lending, the most important thing is finding the right type of loan, matched to a person’s circumstances or business requirements.
If you’d like a loan product to be found for you, consider applying through a broker for an online loan with a direct lender. Ultimately, keeping loan costs down and using the loaned money as a foundation to improve future earnings potential is a means of empowering financial strength.