When it comes to online loans, people are talking about long-term loans like housing loan and car loan. These kinds of loans last for several years and big money is involved here. But here we are talking about short term loans online. There is a variety of short term loans are available for your purpose. In most cases, emergency bills and unforeseen expenses are the reason for people looking for short term loans in the US. Payday loans don’t work like long-term loans at all. Short terms are easy to obtain; you can have it within a single day! However, the interest rates can be high. Well, let’s learn more about them below in little detail.
Can You Define The ‘Short Term Loan’ or ‘Payday Loan’?
According to Consumer Finance, a payday loan is usually a short-term, high cost loan, generally for $500 or less, that is typically due on your next payday.
When it comes to short term loans, people have plenty of questions. So let’s address the term ‘short term’ below.
- The repayment duration can vary from lender to lender.
- In general, if the repayment period is less than a year it is considered to be a short term loan.
- Most of these loans are meant for 6 month period.
- 3 months and 9 months loans are also common.
What About Collateral?
When it comes to short term loans, that is the most frequently asked question. Let’s address the collateral thing here.
- Short term loans don’t require high-value collateral.
- Most of the short-term loans are unsecured.
- Though most of them don’t ask for collateral, the collateral might be needed in rare cases. Even then, the value of the collateral is not that high.
- Many people use their vehicles as a form of collateral in that case.
- More than collateral, most of the lenders will want you to have a steady income. Having a job is going to be helpful in acquiring one of those loans.
In general, short term loans have higher interest rate. However, the rate is dependent on the amount you borrow as well. If you borrow a larger amount, you will obviously have to pay a higher interest. The length of the repayment schedule and the involvement of collateral decide the interest rates. However, you need to keep in mind that you will be paying an insane amount of money as interest when you go for such short term loans. So go for them only when it is an absolute necessity.
Where To Find A Lender?
Finding a letter is another issue. Though there are so many lenders out there, I would suggest you to go back to the lender you deal with for long term loans. Banks, online lenders and finance companies offer short term loans. Go for someone trustworthy. There are so many online lenders in the UK and the process is really fast with them. Another suggestion is to take your time checking out different lenders before you finalize a particular one. When you compare the lenders, you will be able to see who has the most attractive repayment schedule and least interest rate. When you don’t do this, you will be making a mistake. So pick the right lender.