Pros and Cons of Short Term Loans
Emergency payments can be difficult and there are times that you will struggle to pay the basic outgoings and afford that broken boiler or car repair costs. However, there are short term loans available for you. You should consider other options before you agree to this but there are some benefits into taking one.
The first step that you should take is trying to organize an overdraft. Your bank will already have a relationship with you and may be happy to organize you to go into your overdraft temporarily. They will usually keep the fees low and the interest at a manageable rate. You will need to pay the money back when you say you will otherwise you could find that your interest rates shoot up and more fees are added on top.
Another option is to look at your credit cards. If you have enough space on these, then excellent. They are usually the best way to gain credit temporarily; remember to pay it off at the end of the month. However, there may be a chance that you are already too far into your credit and your limit is not high enough. If this is the case then you could always ring and speak to someone so that you can temporarily increase your limit. Some companies will be happy with this but watch out for any fees.
Finally, it comes to the short term loans. There are pros to taking one of these out. The first is that they can help your credit rating since by paying back the loan on time, you are proving that you are a responsible lender. However, this will only work if you pay the money back on time. If you wait, then you will find that it does more damage to your rating.
Short term loans will not look into your credit history, which is excellent news for those who are struggling with bad credit. However, there are some requirements; each company is different so you will need to find the best one for you. Most will have the requirement for you to be over 18 but there are some that will require that you have a set amount of money in each month and be in full time employment. This can be difficult for single parents or those that have been made unemployed.
However, there are companies that offer short term loans for the unemployed or for those who are self-employed. There will be a few extra checks but you will find that they will not be as difficult to get the short term loans as you will find taking out a personal loan is.
The interest rates are higher with short terms loans but this APR can be ignored considering you are only taking one out for a few weeks. Most companies will have set rates for the first month and there are some that will charge a daily rate if you know that you will pay it off within a week. These rates are often lower than overdraft or over the limit fees.