What is a Short Term Loan?
If a loan is set for repayment in one to three months, borrowing between a hundred and three thousand pounds, it’s of the type known as a short term loan. There are some lenders who are willing to extend the loan terms as far as twelve months, though of course over that period the loan will accrue a lot more interest.
Short term loans have been marketed as an alternative to personal loans or bank loans.
So How Do Short Term Loans Work?
A small loan for quick use is usually best served by a short term loan which can be repaid easily and swiftly. There are set criteria for different values of short term loan and, if you meet them and your credit score is acceptable, you can be approved swiftly and without the need to secure the loan against collateral.
This does mean that if you default, you can’t lose your property – but there are other penalties for damaging your credit score in that way, of course. Penalty fees will be levied against the amount you owe and your credit will be damaged if you fail to repay the loan in the time agreed.
What Are Short Term Loans Used For?
You’ll most commonly see short term loans taken out to handle a sudden emergency which will need to be paid for.
By getting the money to handle it immediately and spreading repayments out over a few months you can really relieve the immediate extra stress caused by the financial dimension of an emergency, and ease the burden as a whole.
The extra peace of mind can be a godsend, and knowing you won’t be left too short of cash during the repayment months really helps too.
What Should You Be Looking For?
Everyone’s circumstances are different, so there’s no one best loan. You need to find a lender who will offer you enough for your immediate needs, who will allow you enough time to repay it, and whose interest rate isn’t too bad. Be sure to evaluate each quote carefully so you know it’s going to be right for you.