Banks offer financial products ranging from personal loans to mortgages. Unfortunately, they fail to offer access to small funds for the short term, especially to their clients with poor credit history.
You may gain approval for an overdraft on your current bank account but the benefits are for clients with a good credit score. It means people having trouble accessing mainstream financial products experience financial exclusion. Those people with less than average credit scores use private lenders to borrow funds for resolving their financial emergencies.
Short term loan
Short-term loans are designed for repayment within a couple of weeks or one year. For short-term loans, the lender conducts credit checks or evaluates financial history. On application, the borrower will receive a quote including the terms and interest rate. The short-term loan providers reach out within not more than an hour. If you agree to their loan terms and interest then the money is transferred within 24 hours to your specified bank account.
If your need is for a couple of days and you are certain that you can pay the amount in a lump sum with the next paycheck then choose the payday loan option. Visit https://www.loanpig.co.uk/payday-loans/ to learn more about the payday loan interest rates and application process. Remember, the interest rates are exorbitant, so choose this option as a last resort.
Are short-term loans less cheap?
Short-term loans are expensive in comparison to traditional loans but the interest rate differs from one lender to another. Do your due diligence and compare offers to choose the best deal.
Short-term loan benefits
Fast cash – You gain quick access to handle unexpected expenses.
No collateral – You don’t need to use a car or house or any asset as collateral for short-term loans. Money is received without risking your valuable assets.
Poor credit is fine – Even with poor credit, you can get approved for some short-term loans. You will need regular income to gain quick cash.
Flexibility – A few lenders offer flexibility in short-term loans. They work with borrowers and customize a payment plan suitable to their preferences and needs. This does not apply to payday loans as they are the shortest loan types lasting until your next salary cheque.
No lengthy commitment – Short term loan means you have to stay committed for a short time to pay back quickly and progress.
Short-term loan risks
Quick cash comes with a price!
High-interest rate – Long-term loans carry significantly low-interest rates than short-term loans. The total loan cost for the short term is generally high!
Not long-term solution – Short-term loan helps to resolve situations when you are short on funds. Due to its high total costs and heavy terms, this is not a suitable solution for long-term financial adversities.
Costly fees – Late payment penalties are high and can add up quickly. This can make the total costs of short-term loans rise steeply.
A short-term loan from online lenders is suitable for people who cannot get overdraft approvals from banks. Even if your credit score is good and you qualify for an overdraft the procedure in the bank is lengthy. If you need quick cash to cover unexpected small amounts of bills then short-term loans are great.