What you need to know about short term loans
Posted by emilyhilscher on July 21st, 2017
Short term loans can have a tenure of a few days to a few months or even a couple of years. There is no exact definition of short term loans, but all loans which have a tenure of fewer than 3 years can be considered to be short term loans. People take short term loans for many different reasons.
Why people take short term loans
In the economy of today, most people are not able to make sufficient savings in order to buy expensive items like a car, household appliances and many others. They either buy these items with the help of credit cards or take small cash loans for this purpose. At the same time, people may also need a financial helping hand in times of financial emergency like when they need to get their car repaired or when there is a medical emergency which is not insured. This financial helping hand is available in the form of a short term loan.
Repayment method and what to keep in mind
As mentioned above the amount and tenure of a short term loan vary greatly and so do the repayment methods. Sometimes a short term loan may be like a payday loan which has to be repaid in the form of a single lump sum of money. Such loans also have a very short tenure which can range from 7 days to a few months. The rate of interest on these loans is also very high and therefore you should take such loans only if you really need the money for some important purpose. It is not advisable to take a short term loan or incur any kind of debt for frivolous purposes. You need to bear in mind that if you are unable to repay the loan in time it can have a serious negative impact on your credit score and make it difficult for you to get loans in the future. Not only this even prospective employers and landlords conduct a credit check before they give you a job or rent their property to you. If you have a bad credit score it may become difficult for you to find a good job or get a good home to live in.
How to ensure that you take a loan responsibly
If you think you need to take a loan but you are not sure what amount or tenure you should opt for, then your best bet is to approach a loan broker. While most financial advisers charge a certain fee for providing advice regarding loans, all loan brokers employ financial advisers who provide such advice free of cost. They will first analyse your financial situation and your monthly income and expenditure graph and then suggest the instalment loans amount that you should take so that you can repay your loan comfortably. Of course, in spite of all good intentions, things can still go wrong like you may be suddenly laid off from your job or have your salary reduced. In such a situation the best financial plan can go haywire. However, if you are experiencing such difficulties then the loan broker will act as a mediator between you and the lender and find a mutually agreeable solution.Also See: Short Term, Term Loans, Term Loan, Loan Broker, Term, Short, Loans
Federal Funding Programs
Each year billions of dollars are distributed to the general public through government, federal and private funding programs in the form of grants, low interest and no- interest loans. Click to learn more about these programs!