What to Look for When Applying for Short Term Loans
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.
This type of loans effectively loosens the ropes that strain your budget whenever a financial emergency occurs to you, and whenever you need urgent money as fast as possible without long waiting period for the approval.
What does a short term loan refer to?
Just as the name suggests, a short term loan refers to a loan that you should pay off within a short amount of time. Typically, you can take the loan for a few days and repay it by your next payday with your paycheck. These loans are mostly provided by private financial institutions or organizations. Most lenders will require the borrowers to repay within two weeks, although some may extend the term up to four weeks.
The amount you can expect from a short term loan just ranges from $100 to $1,500, as the banking institutions would not take the risk to give the borrower too much cash due to the insecurity. While offering unsecured loans, the lenders would often require a higher service fee due to the high risk they bear. For instance, payday loans, the most typical type of short term loans, may charge a $30 fee for each $100 borrowed.
What are the advantages of short term loans?
First of all, short term loans make it easier and faster for people with bad credit getting urgent cash. Traditional banks and financial institutions sometimes refuse to provide loans for people with poor credit history. However, this is not a case for short term loans! Most short term loan lenders do not have requirement on the borrowers’ credit score. Additionally, short term loans may improve your credit if you settle the loan on time. Loan lenders sometimes report to the credit bureaus about the loans that are repaid on time by borrowers. As a result, a person can improve his/her credit after on-time settlement.
Besides, though the interest rates of short term loans are higher than traditional loans, considering the short repayment term, the actual interest amount you pay for short term loans are much smaller. That’s because although long term loans carry low interest rates, borrowers have to pay continuously the amount of interest over a long period. Thus, do not get tempted by the seemingly lower interest rates of long term loans.
Finally, application and lending process for short term loans are simple and quick! As there is no credit check, short term loans have fast and efficient processing. Borrowers just need to fill out an application form online and meet some specific requirements of the lenders. Once the lender and the borrower have made the agreement on the loan amount, repayment term, interest rate and service fee, the cash will be transferred into the borrower’s checking account directly, typically within 24 hours.
What to look for when applying for a short term loan?
Though credit check and collateral are not necessary for loans of this kind, most lenders put some basic requirements which the borrowers must meet in order to receive the loan. Chances are that you are the one with bad credit and currently need spare money to finance.
Here is a brief guide right for you!
Open a checking or savings account
To be eligible for short term loans, you should have an active checking or savings account, so the lender would transfer the amount into your account as well as withdraw the repayment on the due date automatically.
Have regular employment and stable income
Besides an active checking account, the lenders will require borrowers to have steady jobs with stable income which must meet the minimum monthly income limits, as many short term loans are backed by your next paycheck. You should have all proof required in hand for the successful application.
Compare the loan fees carefully
As we have mentioned, short term loans often charge high fees, particularly for people with bad credit. The fees usually range between $15 and $35 for each $100. Make sure to contact as many as lenders possible for the best interest rate, term and service fee.