Unexpected or emergency expense can go beyond your savings, and for you to get by you might consider taking on a new debt. A revolving credit from either a line of credit or from credit card can give you a flexible option but if you have an immediate need for a certain amount of money, it would make sense to apply for a short-term loan.
What are the usual reasons for short-term loans? A short-term loan can provide an amount of money that can be used for various purposes. It could help provide funding for debt consolidation, home repairs, health emergencies or even for immediate business needs.
Where can you apply for a short-term loan? Short-term loans are offered through various financial channels such as banks, lending companies, credit unions and even through online lenders.
Types of Short-Term Loans
- Personal Loan- comes in an installment credit form which provides a one-time payment of cash money to borrowers. The borrowed amount including the interest will be paid by borrowers according to the term agreed upon over regular monthly installments. Applying for a personal could be as fast as a few minutes only but processing and approval would require one business week.
- Payday Loan- is easy to obtain as long as the borrower has a regular job. The lender will require proof of salary through pay slips. The usual term for payday loan is one month and the borrower has to pay a lump sum that includes the amount borrowed plus interest.
- Cash Advance– this is a type of loan that is based on an existing credit card. This is the most convenient and the quickest way to acquire a specific amount of money. The loanable amount depends on the card’s line of credit. Cash advances can be acquired by either withdrawing it from ATM or from the card issuer bank.
With short-term loans, you can get the money right away and most lenders don’t require a lot from you to be qualified – no collaterals or guarantors needed. You also pay it back quickly so you don’t have any problem in managing this type of loan. It might be relatively small but it surely will help a lot especially in times of emergency.
When there is a financial crisis, like what we experience nowadays; short-term loans are popular to a lot of people, so they can have something to use for their basic daily expenses like food, transportation, rents or mortgages and utilities. A reminder to all who avail of this type of loan, make sure the money you borrow goes to where it is really intended for. It is a small amount therefore; it should be spent for the needs and not wants. Don’t think that just because it is easy to pay, you can just spend it to where you wanted. Think first of your financial goals and have an effective budget to follow so this money will be worth it. It is still best if you can avoid any types and kinds of loans in the future to have a financially secure life.