The Ins and Outs of Short Term Loans
Short term loans can seem daunting when you don’t have the full information about them. Once you fully understand what they are, what they’re useful for and when you should look at other options, you’ll be able to make an informed decision on whether or not they are right for you. I’ve teamed up with cashasap.co.uk, experts on short term loans, to bring you this quick guide. Read this blog for all you need to know about short term loans.
What Are Short Term Loans?
A short term loan is an easy way to borrow money over a short period of time. The time can vary anywhere between just one day to up to three months (sometimes six depending on what lender you choose). They are known to be one of the most expensive ways to borrow money, but they have the benefits of providing you with money instantly while having short and flexible borrowing periods.
Types Of Short Term Loans
Payday Loans
Payday loans are one of the two varieties of short term loans. These are designed so you can borrow money in an emergency and pay it back one you reach your next payday. This is done in one single repayment once you reach your next payday.
Installment Loans
Installment loans are another variety of a short term loan. Their purpose is the same – to provide cash when an unforeseen cost arises – but are instead paid back in multiple installments. This has the disadvantage of being a bit more expensive than a payday loan, though also has the benefit of being able to spread the cost of repayments.
Loan Terminology
APR
Annual percentage rate (APR) calculates the hypothetical price that borrowing the money will cost per year as a percentage. Short term loans have very high APRs due to the fact that they last much less time than a year. Because of this APR isn’t always the best way to gauge how expensive a short term loan is. Instead it is better to look at the overall cost of the loan to figure out if you can afford it or not.
Direct Lender
Direct lenders are an organisation or company that lends money directly to you. This is instead of a broker, a third party that stands in the middle of you and the direct lender. They work as a middle man that helps you to find the best deal, such as a price comparison website. Although a lot of people choose to borrow from direct lenders to get the best rates, it can be valuable to use a price comparison website to help you find the best deal. When opting for this kind of financing, it’s important to approach trusted brokers like The Bridging Loan Company to get the best rates from a company that won’t take advantage of you.
FCA
The Financial Conduct Authority (FCA) are a regulatory body that are completely separate from the government. They regulate the workings of various financial organisations, including loan lenders. Their job is to ensure they are staying within the law and being fair to those that use their service. You should always look out for FCA authorised and regulated lenders so that you know you are borrowing money safely.
Do I Need A Short Term Loan?
You should only get a short term loan if you definitely need one. If the payment or expense is not urgent and can wait until you have some more money, then you should hold off on getting a loan. Instead you should carefully manage your budget and save up to complete the payment.
If an emergency cost or unforeseen payment arises, such as a car repair that you need to be completed so you can get to work, then a short term loan could be the right choice for you. You should only go ahead with this if you know you will have the money to pay back the amount by the repayment date. If you are unsure about this, seek professional advice before deciding to get a short term loan.
If you are looking for a short term loan and want more information, then visit cashasap.co.uk. They are a FCA regulated and authorised direct lender in the UK.
