When many people think about loans they think about large long term loans. Loans like a mortgage or a car loan. Even personal loans in larger amounts are taken out for at least 12 months and usually require fairly good credit. There are however an increasing number of lenders – many of them Internet based – who offer “short loans”.
What are Short Loans?
The name is pretty much self explanatory. A short loan is designed to be taken out just for a very short while – usually 60 days at most. They are supposed to be used for emergencies only, not as a long term solution to a financial situation as the interest rates attached to these loans are very high.
What Situations Might Warrant a Short Term Loan?
Short loans – which are also often known as payday loans or fast cash advance USA loans – have a lot off critics. These critics point to the high interest rates attached to these loans and say that they are simply not worth it. And as a long term solution they are not. However there are certain situations in everyday life for a lot of people when a short loan can be a real help.
Weekly pay is a rarity these days. Most people are paid fortnightly or monthly and there does come a point for many of them where extra money is just not there until they next get paid. Imagine then that your boiler breaks down and your heat and hot water goes off. You need to call a plumber but he will want to be paid right away, not in two weeks when you get paid.
The prospect of two weeks without heat and hot water, especially in the winter, is not a pleasant one. In this situation a short term loan, which can usually be funded in just a few hours, and today there are even payday loans online available, would be a solution. Maybe not the ideal one but at least you and your family would not freeze!
This is just one scenario, there are many others. A car that needs to be repaired so that you can actually get to work to make money, a pressing bill that simply will not wait until your next payday.
Using a Loan the Right Way
There are people who have got themselves into real trouble with short or payday loans. The problem is that some companies offer the option to extend the loan, allowing you to pay off only the interest due and roll the principal over until your next payday. Some people take this option gladly, relieved not to have to pay everything in one go and leave themselves short. The problem is that fees and interest are accruing all the time and you can very easily end up owing far more than you borrowed in the first place.
To use a short loan the right way you should only take one out if you have exhausted all your other options. If that is the case you need to resolve to pay back the loan as quickly as possible. If you pay back a short loan on time it will still cost you money but the fees may be in line with what your high street bank charges for bounced cheques etc.
Finding the Right Loan for You
There are a growing number of companies out there who have gone into the short loan business. many of them are reputable and responsible and fully licensed but tracking them down is not always easy. The problem is that a lot of the Internet sites you find that claim to offer short loans are not sites belonging to lenders but to loan brokers.
These loan brokers work with (or are a part of an affiliate programme with) a great many lenders. Completing their application form will not get you a loan, it will simply get you referred on to lenders so that you can fill out their “real forms”. This can be a frustrating process and the threat of identity theft is always there, especially if you do not see that little lock symbol that signifies that a website is secure.
Review sites on the other hand can be more useful. They too may be making money by using affiliate links to lenders but at least you are not being asked to complete form after form. And actually having some basic information about the various lenders in one place can help you compare important factors like interest rates and fees while still cutting down on your research time.
What If You Can’t Keep Up with Your Loan Repayments
If you are finding that repaying your short loan is harder than you anticipated ignoring the situation is the last thing you should do. In the end short term loan lenders have all the same access to the tools to collect their debts as a bank does, including getting a County Court judgment or worse.
The right move is to call your lender as soon as you realise that there might be a problem. Many lenders are willing to work with people in this situation and help them get their debt paid off as best they can.
Rolling over your loan over and over again is not the right answer. Most lenders these days will only let you do that once or twice anyway, a response to the criticism they have received in the past. This increased responsibility has also meant though that lenders are more willing to come to an amicable and workable arrangement with customers who are having difficulties paying their loan back. Will they ever grant you a short loan again? Probably not but then again the lesson learned will probably mean that you would not consider a short loan again anyway.