Short term loans could be the ideal opportunity if you are short on money and you do not really need a fortune. This is not the type of loan you get to buy a house, build an extension to your house or get a new car. Instead, you could use it for an emergency repaid, unexpected bills, medical emergencies or perhaps a shopping session.
Short term loans can usually be applied for over the Internet. Applications are normally processed within a few minutes. If you are successful, you will get the money in your account within an hour or two. They represent a convenient option and they will easily put you back on track should unexpected situations arise.
Now that you understand how short terms work, what kind of options do you have? What kind of loans are considered to be short term loans?
Payday loans represent some of the most popular options when it comes to short term loans. Their name is self-explanatory. You get a certain amount of money that you could normally cover with your wages without getting in more debt.
These days, payday loans are no longer about single payments. In the attempt to diversify their portfolios, more and more lenders provide payday loans that could be repaid in more payments, over up to six months.
Payday loans are very easy to apply for. You usually have to do it online. Requirements are basic and some lenders are even specialized in bad credit loans. Processing the application and getting the money should be a matter of an hour or two.
Doorstep loans are not as popular as payday loans. In fact, they tend to lose their popularity, but people still rely on them. A doorstep loan involves pretty much the same procedure as a payday loan, only you do everything in person.
It does not mean that you have to go see a lender, wait in queues and negotiate with a manager. Instead, you complete the same assessment you would normally do online. The difference is that a customer representative will visit you in a few hours and do it on your doorstep.
On the same note, the money is usually given in cash, rather than in a bank account. It is done in person. Again, these loans are not as quick and efficient as payday loans, so they are not as popular these days.
Online Instalment Loans
Similar to other types of short term loans, online instalment plans are great for those with a relatively bad credit score. They allow borrowing small amounts of money without having to worry about the financial past.
The main difference between online instalment plans and other types of short term loans is that you will usually have up to a year to repay it. Payments are taken straight from your bank account. You cannot apply face to face, but over the Internet.
Credit Union Loans
Credit union loans come with extremely diversified terms and conditions. Basically, each union has its own terms and rules, so conditions vary. These loans are normally given to members only. They usually come with better fees and interest rates than other types of loans.
You might need to be part of the union for a certain amount of time before being eligible for a loan.
In the end, short term loans can be quite varied. No matter which option is more suitable for you, it is essential to determine how much money you need. You also need to understand how much money you will pay back – plus, the terms and conditions must never be overlooked.
Short term loans represent a convenient alternative to traditional bank loans today. The main difference? A traditional loan is normally paid within a few years at least – sometimes, up to 30 years for a mortgage. On the other hand, a short term loan is built to be paid back within months only – usually up to six months.
What to Use a Short Term Loan for?
There are more situations wherefore you might need a short term loan.
Unexpected medical bills are quite common and may cause various issues. Sometimes, you could be covered by your insurance. Other times, you may need to pay in monthly instalments with the doctor – dentists usually allow such plans. All in all, there are times when you might need to spend money in one go too.
Whether you take regular medication on a regular basis, your prescription has changed or you have just ended up with an injury, a medical emergency is a common reason for short term loans.
Unexpected repairs can tackle every aspect of your life. For example, you might need to fix a broken boiler. You do not want to shower with cold water, do you? Especially during the wintertime. On the same note, your car might break down. If this is your only option to get to work or take your kids to school, you do need your car and you cannot afford time off.
Repairs can tackle everything. They could be around your backyard, your gate, your front door, walls and so on.
If your favourite trainers are on offer and you know they will not last until your next payday, a short term loan could get you sorted. If one of your best friends has just had a baby, you might need to spend some money for presents. Have you forgotten about a relative’s birthday? As long as you can remember on time, you are back on track. But if your payday is way after the birthday, you will need a short term loan.
Your gas bill could go through the roof when the cold season kicks in. Perhaps you had to make some calls abroad. What if the rent is due a couple of days before you actually get paid? Such situations could be sorted within a month, but they cannot be delayed, hence the necessity of a short term loan.
How Short Term Loans Work?
There are a few steps to go through when applying for a short term loan.
Agree on the amount of money you need – discuss with the lender or simply apply online. You will also learn about the interest rate.
You agree on the time to pay the loan back, be it a month or six months.
You decide on the best time of the month to make payments.
A credit check will be performed – yet, many lenders are specialized in bad credit loans too.
Your application gets accepted or rejected within minutes only.
Your money will be in your account within an hour or two if your application is successful.
You start making repayments on the agreed date.
In the end, short term loans represent a good choice every now and then. Sometimes, a short term loan could be the only option you have. Whether you are pressured by time, your credit score is not the best or you simply need a small amount of money rather than a massive loan, a short term loan will take you out of trouble and put you back on track.
A long repayment duration, a higher possible loan and an efficient application – these are some of the most appealing benefits when it comes to instalment loans. At the same time, there are even more benefits for people who find it difficult to save up for one time payments. Instead, they would rather pay more with the interest rates and monthly payments in the long run, but less on a monthly basis.
Instalment loans come as a general term. Practically, there are more types of instalment loans and each of them comes with its own specifications. Here are some of the most popular types of instalment loans you can normally benefit from.
Mortgage Instalment Loans
A mortgage involves buying a home over a long period of time. Normally, British banks can provide mortgages between 15 and 25 years of repayment, but different rules apply, as well as customers with unique needs and financial situations. The repayment time can be both shorter and longer – it may even exceed 30 years.
Different mortgages come with different requirements and rules. Some of them may have a fixed interest rate, while others come with variable rates. Monthly payments are usually set, but then again, they can increase or decrease. Usually, they are less likely to change.
Automotive Instalment Loans
If a mortgage is suitable to buy a house, an auto instalment loan is suitable for cars. You might find it difficult to save £25,000 for a new car. Even if you want to buy an old used car, spending £1,000 or £5,000 in one go could be difficult. You may not really want to play with your savings – unexpected situations may arise later on as well.
From this point of view, an auto loan is usually paid within 12 to 96 months. Different lenders come with different rules though. Unlike most expectations, these loans are different from other types in terms of interest rates. If you opt for a long term repayment, your interest rate might be smaller than if you choose a short repayment plan.
Payday Instalment Loans
Payday loans used to be paid in one go. They were designed for one month only – the day you got paid or shortly after. Things have changed a little in the last years, meaning payday loans are no longer one time payments. Instead, you can opt for a few months. You are less likely to get more than six months anyway and it also depends on how much money you need.
Unlike other types of loans, these cash loans come with a higher interest rate. They are fully regulated by the FCA now, so there is not much to be worried about in terms of fees and charges.
Personal Instalment Loans
Personal instalment loans are used for a plethora of different purposes. You might end up with a major car repair that cannot be delayed. Perhaps you have to consolidate a debt or maybe you have some sudden bills.
These loans are normally given for a few years. They have a higher interest rate because lenders do not need collaterals.
As a short final conclusion, instalment loans can be quite diversified. No matter what kind of loan you get or what you need it for, it becomes an instalment loan if you repay it in two or more goes. While one time payments might be more efficient from a financial point of view, it is in human nature to opt for more smaller payments. It is just better for your peace of mind to know that you will not have to pay huge chunks of money in single payments.
Instalment loans are usually paid back in small and fixed amounts. Practically, almost any type of loan is an instalment loan. You are not going to buy a house and be expected to pay £150,000 in one go after 25 years. After all, this is the purpose of a loan. You cannot save so much money over a short period of time, so you take it easy – in smaller payments.
Generally speaking, quick loans or payday loans were not designed as instalment loans. Their name is crystal clear. You got so money, then you had to repay it when you got your wages. But then, more and more lenders have changed their rules in order to attract more customers – you can actually get a payday loan and repay it over more than just one month.
Now, what are the benefits of instalment loans?
Flexibility is one of the main benefits of instalment loans. You get a flexible repayment plan that may take a month, two months or even more. Typically, these loans are given over a few months – you will not really need a year to repay £500, will you? Of course, there are various exceptions based on each customer’s situation.
The overall idea is to make the loan more manageable. Sure, you could save up and pay it in one go. But there will always be small issues, unexpected situations or the thought that you can save less this month, as you plan to save more the next month. These issues tend to cause even more debt, hence the necessity of instalment loans.
There are lots of lenders out there, as well as a plethora of special offers and instalment loans. Normally, instalment loans require a monthly payment. It is made on the same day – most commonly, on the day you get paid or just after this day. Are you getting paid weekly? Some lenders allow weekly payments as well, only to make this venture easier to deal with.
It is worth noting that not every lender will accept multiple payments when it comes to repaying the loan. Other than that, some lenders bring in discounts for those who repay their loans faster or stick to the exact same date every month. Make sure you double check the terms and conditions before making a final decision though.
Instalment loans tend to make your life easier. They allow you to manage your finances way easier than normally. The more months you spread your repayments over, the less you will pay on a monthly basis. It is one thing to pay £500 in two months and another thing to pay £500 over five months.
More payments will make budgeting a piece of cake. However, whether you pay a loan over more months or you get more money, the interest rate will increase as well. Basically, the longer your loan goes for, the more you will pay in interest. The monthly payments are great, but the long term expenses will be quite high.
Bottom line, is it worth going for an instalment loan? Absolutely. It depends on what you need the loan for. A payday loan can be repaid in one go once you get paid, but you can also spread it over two or three payments. This way, you reduce the possibility to ask for another payday loan by the end of the month.
Instalment loans are much more efficient than single payments. People simply find it more efficient and easier to budget when they pay small monthly payments. Sure, some may disagree with it, but doing it the other way involves excellent budgeting skills, which not everyone might have.
Quick loans have started gaining popularity. After a massive drop in the early 2000s due to dodgy fees and charges, the FCA has stepped in to regulate this industry. It is now genuine and less likely to cripple you. In fact, a quick loan is similar to a classic loan. There are a few differences though.
First, you may not be able to get £5,000. You will need a regular loan for that and it may take a few days or weeks to get it. Second, once you get accepted for a quick loan, you will be able to receive the money within an hour or two – straight to your bank account, no applications, letters or face to face meetings.
Now, there are a few rules you need to keep in mind when opting for quick loans. One of them is pretty simple – only apply for what you need.
Getting More Money Than You Need
Assuming that your financial situation is stable and you are employed, it might be tempting to apply for more than what you actually need. It is a difficult month, so you might want some extra. You never know when you might need it. Perhaps you want more than just basic groceries when you go shopping. Maybe you want to go out a few times too.
Generally speaking, a small loan is more likely to be accepted than a large loan. Therefore, asking for more than you need might tip you from approval to rejection.
Keeping the Interest Low
On the other hand, a higher loan will most likely bring in a bigger interest rate. After all, the interest rate is directly proportional with the loan. In other words, applying for the smallest possible loan will reduce the amount of money you have to apply.
Not only do you increase your chance to be approved, but you will also get into a better financial position throughout the following months.
Keeping Your Expenses Low
Most people consider getting a quick loan straight away. They figure out how much money they need and they go for it. In reality, they need less than that. The loan could be way smaller if they actually worked on reducing their expenses a little.
There are more ways to do it. For example, you can buy cheaper food. You can forget about that fancy food for a month or two. You can also fill your tank halfway up, rather than all the way to the top. If you go out clubbing three times a week, do it once instead. Cut on the fancy items and cook for a few weeks – leave the takeaways.
It may sound like small things, but all these expenses will add up. You may feel like you need £500 to overcome this bad month. In reality, you will probably do with £300 as well. In the long run, you will also pay less on interest fees. Therefore, it pays off sitting down and finding ways to remove your monthly expenditure – at least for a month or two.
As a short final conclusion, quick loans are attractive. There are more reasons behind their popularity and accessibility is one of them. But then, why would you pay more in interest rates when you could pay less? Why would you struggle to repay over four months when you could do it in two months?
It takes a bit of homework and planning to figure out how to reduce your expenses, but it can be done. The best part about it is you will manage to overcome the problem much faster.