Unexpected expenses can often disrupt our financial stability and are far from welcome when trying to make ends meet. As they can come out of nowhere leaving you with a quick decision to make, this is where short term loans can offer a helping hand, helping to cover financial emergencies when in-between paydays or when without sufficient savings.
Short term loans can offer quick access to funds even if you are someone with a low credit score, so what do you need to know about them before seeking out a lender and applying for one? The more you know, the better you can make an informed decision on your finances, so understanding when to use them and how to choose a reputable lender is important.
When to Consider Short Term Loans
Short term loans can become a suitable option for those times we are faced with sudden and urgent financial needs. This could be urgent home repairs or unexpected bills that need to be settled quickly. Some people may experience their wages being delayed due to unforeseen circumstances, causing issues with any essential outgoings that need to be paid on time. There are many scenarios where short term loans can help bridge the gap and keep your finances under control.
Whenever you’re confronted with a short-term financial issue that requires immediate attention, and options like a personal loan aren’t feasible due to their generally higher loan amounts and longer repayment terms, short term loans offer a quick and accessible solution. You can borrow a small amount and repay over 3 to 6 months to get you back on track, as long as you afford the repayments.
Pros and Cons of Short Term Loans
Short term loans offer several advantages to those who need them, including quick access to funds. You are normally able to apply online 24/7 and get a quick decision on whether a lender can help you. This makes them ideal for emergencies. They also tend to have more flexible eligibility criteria, making them accessible to those who perhaps have a poor credit history but can still afford repayments.
They can’t guarantee approval, but short-term lenders are more willing to help those with a low credit rating if they can see the loan is sustainable. Also, the shorter repayment periods between up to 6 months and lower loan amounts under £1,500 mean you can clear off the debt relatively quickly.
However, you’ll need to consider that short term loans can be a more expensive way to borrow, especially if doing so regularly. They are ideal for one-off emergencies or unexpected expenses, but they are not suitable for ongoing issues or long-term financial difficulties. You’ll need to carefully consider the interest charge on top of the amount you want to borrow and be happy with this before applying.
You’ll also need to ensure that having a shorter repayment term, such as 3 months, is something you can commit to and sustain. Whilst the initial cash injection from the loan can help you straight away, you need to ensure the full repayment term is something you can afford to repay each month without issue. While short term loans offer quick relief, it’s essential to carefully weigh the pros and cons before going ahead.
Choosing the Right Short Term Loan
Rather than rush into an agreement, it can help to do a little bit of research before clicking apply. With many different short term loan lenders available online, you want to ensure you have compared your options first and that you choose a reputable lender that will not charge any hidden fees. The best way to check is whether they are authorised by the Financial Conduct Authority (FCA). If they are not, move on and find a lender that is. An authorised lender of short term loans will follow responsible lending guidelines and ensure the loan is sustainable for you before approval.
Be sure to also compare interest rates, repayment terms, and whether they charge for things like late payments. You should also check if early repayment is possible and if any fees are applicable for this. If you find any lenders who charge upfront fees for their services, it’s best to avoid them and instead find those that are fully transparent with the overall cost of the short term loan.
Make The Right Choice For Your Finances
A short term loan can be helpful in the right circumstances, so if you are sure this is a sustainable option for you, you’ll be able to find a flexible repayment term to match your budget. If you have emergency savings or if the unexpected expense can wait until your next salary date, these should always be your first options. When used responsibly and by only applying through FCA-approved lenders, you can hopefully make the right choice for your finances and resolve your issue fast.
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