Short term loans are designed for borrowing small money and repaying it for a certain period which is usually up to 12 months. These loans are often appropriate for people with poor credit who may have a hard time taking out a loan elsewhere.
People have continually opted for a short term loan to rectify urgent bills. Also, lenders on short terms loan would require less to no collateral when dispensing the loan. Since its usually intended to people having a bad credit history, the interest rates are normally higher than another lending alternative. These loan types are the same as your payday loans except that you can repay it over for a longer period which can be up to one or two years.
What are the interest rates on short term loans?
The interest rates are normally high compared to other types of lending. Although you can repay these loans over a longer period than a payday loan, the high-interest charges can cause a drastic effect on your finance.
You must be aware of how much it will cost you when borrowing this loan. We also suggest that you find out the total amount of interest that you’ll pay throughout the period. For instance, if you borrow £600 that you’ll pay within a year, you’ll repay nearly £1100 granted you’re paying on time.
What can happen if I have arrears on short term loans?
If you fall behind payments, you’ll be charged an additional interest for every delay or missed payments. If you can’t keep your payments up to date, your lender will send you a default notice. This can lead to your lender taking further action to collect the debt. They may pass your debt to a collection agency or take court action against you. So, to put the situation under control, you must settle your arrears right away.
Do I need a short term loan?
Taking out a short term loan to meet priority bills such as your rent, utilities, and other bills to pay first, can make your situation in a turmoil. If you cannot meet payment with any of your priority bills, do not take out a loan to pay a debt. You should get debt help and advice so you’ll know which alternative or help is available for you.
Though there are cases wherein you may have unexpected costs, find out ways where you can get help on during emergencies.
What are my options if I have a poor credit record?
People who can’t secure loans somewhere else often consider short term loans. . However, before taking out this loan you must check for other options that you can consider:
You might qualify for a budgeting loan if you’ve been sufficing age benefits for a minimum of 26 weeks. This is possible if you need to secure money for your essential living costs. You’re given two years to repay what you owe and pay it through the same account as your benefits. It is a cheap way to borrow since there’s no fees on interest. You can borrow from £100 to £1,500, depending on your circumstances.
Credit union loans
These are non-profit community-based organizations offering its members with loans ,savings ad accounts as a form of benefits. It can be a good alternative if you’re decline with bank loan. Same as short term loans, you can borrow small amount of money from credit unions from £50 to £3,000, but at an affordable interest rates.
If you took out a short term loan yet you can’t afford paying it, you must seek help and advice from us. Borrowing money constantly is an endless cycle that can create a hole on your finances.