Why You Must Consider a Short-Term Loan?
There are certain times in life when circumstances go beyond our control, and we cannot manage our finances. These instances may occur due to unforeseen medical emergencies, vehicle breakdowns, or home renovations. Of course, there are some expected expenses, such as weddings and holidays. Either way, in a financial crunch, we all need a little pick-me-up. And what better than short-term financing to meet our financial needs without burning through our savings or losing out on our investments?
Types Of Short-Term Loans
As is the case with most loans, even short-term loans come in a wide variety, depending on the needs and preferences of the borrower. Some of the most commonly available short-term loans include –
HSCT Loans –
The FCA defines the abbreviation for High-Cost Short-Term Loans, HSCT Loans, as “an unsecured loan with an annual percentage interest rate (APR) of 100% or more and where the credit is due to be repaid, or substantially repaid, within 12 months.” As you might have guessed, these loans are ideal for short-term borrowing of smaller loan amounts ranging from £100 to £1,000. While readily available, HSCT loans can be unviable for most borrowers due to their high cost. Hence, we advise you to take this loan only in an absolute emergency.
Instalment Loans –
These loans are ideal for borrowers wishing to gain access to £1,000 or more and are comfortable committing to a longer repayment schedule, typically lasting between 12 and 60 months. Thanks to their collateral-free nature, relatively lower interest rates, and flexibility of use, instalment loans are highly sought.
Guarantor Loans –
If a borrower is looking for a short-term loan with bad credit, then having a guarantor with a good credit score co-sign the loan can help them acquire the loan more seamlessly. The loan terms remain the same as in the case of instalment loans; however, in the case of non-repayment, the lender can hold the guarantor liable for the repayment.
Benefits of Securing Short-Term Loans
Now that you have a decent amount of knowledge about these loans, the question arises – “Is a short-term loan ideal for you?”. To know the answer, consider the following benefits of short-term loans, and we believe you will be able to see how and why a short-term loan can prove to be a perfect fit for your financing needs.
1. Unsecured in Nature
You do not need to pledge your residential property or vehicle as collateral to borrow a short-term loan. Since the loan is offered for a relatively shorter span, and the amount is usually lower than £30,000, the lenders decide your loan repayment ability based on other factors such as your income source, overall expenses, and credit history. If you need a short-term loan with bad credit, lenders usually approve the loan if you have a guarantor (with good credit) to co-sign the loan.
2. Ready Availability
In most cases, short-term loans are required to meet immediate financial expenses. Thankfully, most lenders process short-term loans swiftly, with wait times as few as 24 to 48 hours. In some cases, you can even get approved for the loan and disburse the loan amount into your account on the same day. Hence, if quick access to cash is what you need, a short-term loan can definitely fulfil this requirement.
3. Short-Term Commitment
As the name suggests, short-term loans are ideal when you know that you can comfortably pay off the amount in a fairly short period. Hence, they do not need a long-term commitment. This frees you from the worry of financial management in the long run. Moreover, if you need to borrow funds in the future, you will be free to do so without worrying about the repayment of your previous loans.
4. Lower Cost
When you take a short-term loan, the payment per instalment is usually on the higher side, but the overall cost of the loan is lower compared to a long-term loan. Moreover, even if you take a loan for three years and have the means to pay it off earlier than you decided when signing the loan, you can save even more on the interest. This can further help in bringing down the cost of the loan. That said, you must remember to enquire about any prepayment charges or early exit fees from your lender before taking the loan.
One of the most remarkable benefits of opting for a short-term loan is the ability to use it to pay for one or more of your expenses. Whether you are falling short on your monthly bills or need to meet an urgent expense, whether you must take a vacation or wish to upgrade your car, you can use the funds to fulfil your needs.
We hope you are now aware of some of the most compelling reasons why most UK citizens opt for short-term loans. From enabling you to meet your financial needs to ensuring that you can repay the amount in small, manageable instalments, these loans are a boon for anyone looking for easily accessible funds.
Warning – As easy as these loans are to acquire, make sure you have a sound repayment plan in place before taking the loan, as late repayment can cause you serious money problems.
If you need a short-term loan, click here and fill in your desired loan amount and preferable loan duration. We will take it from there and will suggest you some of the best-suited lenders within minutes. Once you choose the lender that you want to go ahead with and submit the details required by them, it will only take less than an hour 24-48 hours for processing the loan and disbursing the amount.