What You Should Know About Short Term Loans
At some stages in our life, we may run into hard times and need an immediate solution to fix the financial problem. Then short term loans come up and keep our financial status on schedule, offering us the urgent cash to move on.
No matter why you are in need of money – car payment, home improvement, college education, urgent emergencies, or extra expenses, short term loans would ensure you the heart’s ease by transferring the amount into your account within a couple of hours.
So, what is a short term loan?
Broadly, it refers to a loan that the borrower may keep for as little as several days, or as long as a few months. Loans of this type are well preferred as people can avoid being strapped for a long period which would result in higher interest rates or more payments. There are many sources providing loans with short repayment term, such as banks, financial institutions and online lending companies.
Though we take these loans for a short term, there is no exact regulation on the duration of the repayment period. In some cases, the borrowers are even allowed to acquit the loan balance and the interest within a year or so. It is the borrower’s financial conditions and repayment ability that largely influence the repayment period.
How much can you expect from a short term loan?
Generally, short term loans range between $100 and $1,500. However, for the first time borrowers, the average is just $300 to $500. The lower amount you request, the quicker you may get the approval. The lenders usually charge at least a 15% fee of your loan amount and the common price is $15 to $30 for each $100 borrowed. Therefore, you should consider carefully the amount you borrow and keep the loan as short term as possible – after all, these loans work for the profit of lenders!
What are the major types of short term loans?
Short term loans come in a variety of options by different lenders, while payday loans and installment loans are the typical forms. Payday loans, also known as cash advance loans, refer to the loans that are repaid when the borrowers get their next paycheck. Installment loans let the borrowers to amortize the payments over a few weeks or months.
Nowadays, some colleges in the US offer short term loans to students. The borrower must be a student and have the ability to repay the loan in a certain period (term), 60 days for instance.
Why to choose short term loans rather than long term ones?
First, for people bearing a bad credit history or poor credit rating, it will be hard to get traditional loans from banks or other financial institutions. However, this would not be an issue for short term loans! Much sweeter is that short term loans are even a good way to re-establish your credit as long as you settle the loan by the due date.
Apart from the benefit to people with poor credit scores, short term loans charge comparatively lower interest amount than other forms of loans. Admittedly, interest rates of these loans are higher than long term loans due to the short period of repayment installment. However, if you take the repayment period into consideration when calculating the interest, you will get to know that long term loans generate higher amount of interest than loans repaid within a short term.
In case of urgent emergencies, short term loans have strikingly quick and effective processing. You can fill up the applications via internet and then lenders will review your application. Everything can be done online which greatly speeds up the loan processing and enables the borrowers to get the amount just with a click of the mouse!
In the past, how can you expect loan providers to offer the money you need when your credit rating is poor? However, now getting a loan without any security or credit check is a thing of past since the appearance of short term loans.
In most cases, bridge loans are used as a last resort, which means that you’d better avoid them if you have other options. In this article, I will tell you some ways to help you avoid bridge loans.
A bridge loan is a short-term loan in nature, with very short repaying terms and extremely high interest rates. The term “bridge” indicates that this kind of short-term loan can fill the gap where you feel strapped of cash.
Last month, Arkansas outlawed an online payday loan lender who was in charge of several online companies. According to the news reported on September 4, 2012, California State outlawed at least nine online payday loan lenders due to the exorbitant interest rate and its overly aggressive behavior in collecting debts.
Payday loans have been viewed as risky practices due to their exorbitant fees. Yet the situation might take a favorite turn yesterday. A piece of news on August 20 states that the federal government has set some new rules to restrict payday loan lenders and protect the borrowers by capping the fees and limiting the loan terms of payday loans.
Short-term loans are provided to those who need cash in a short period, such as a week, a month, or a year, when they feel strapped. You can receive cash almost immediately after you get improved by the lender. The loan amount, interest rates and repayment plans vary from case to case.
Apart from federal financial aid, students can obtain short-term loans as well. Short-term loans for students are typically more flexible and less expensive than those for other people. In the state of Texas, short-term student loans are available at both Texas Tech University and Texas A&M University.
Four years ago, Dustin McDaniel, the current Attorney General of Arkansas Supreme Court, sent letters to all payday loan lenders in Arkansas State declaring that payday lending was no longer legal in the state. McDaniel announced that the interest rates of payday loans were far beyond the usury limit.
Payday loans are prohibited in many states like Arkansas, Arizona, District of Columbia, Georgia, Ohio, and North Caroline. People have some controversial opinions on it. Most folks stand by this prohibition, while a small portion of people have their doubts.