Short Term Loans: The Good & The Bad

Short Term Loans: The Good & The Bad

Unlike the more formal long term loans, consumers use short term loans as a resource for taking care of unexpected expenses or over extension. Some of the loans are labelled payday loans because those who use them often need just enough money to last them until the next payday, with the anticipation of repaying the loan at that time. Each short term loan has both a good side and a bad side.

Short Term Loans: The Good & The Bad

Short Term Loans

Short Term Loans

The Good

Almost anyone can do it

Many consumers want to avoid going through a tedious, formal process at a bank or finance company that often has stricter approval requirements. The approval process for short term loans is usually quick and easy. Most loan companies approve applicants regardless of their credit history, and require no collateral. All it takes is a simple questionnaire and agreement to the terms.

The money comes fast

Short Term Loans

The short term loan amounts are normally as low as $100 dollar or as high as $1000, which makes them easier to repay. Customers can also get the money as soon as the same day of the application. Many companies have an online application process, and will direct deposit the money into a bank account.

If you’re certain that a short term loan will satisfy your need then have a look atĀ for a range of options

The Bad

The true cost of the loan

The small dollar amounts of short term loans may not be enough, and the cost of the loan could outweigh the consequences of doing without it. The small loans often come at a price of extremely high finance charges and interest rates. The companies can legally extend the annual percentage rate far beyond 100 percent. If that is not enough, the window for repayment is short and penalties for extensions or late payments are high.

Fast money is not always good money

One short term loan could result in a long term trap. If an individual is using the loan to fill in a gap between paydays, trying to repay the loan in a timely manner could still result in a delay in paying regular bills. Many companies also send tempting marketing e-mails to lure customers back into getting more loans.

The Takeaway

Not all short term loans are bad, and many have helped individuals during unforeseen circumstances. Consumers should learn how to use this type of loan to their benefit so that they avoid being caught in a trap.

Short Term Loans Up To $1000 With Bad Credit Okay!

If it becomes necessary to obtain a short term loan, they should take precautions to avoid hurting their finances or future credit worthiness.

* Short Term Loans: The Good & The Bad


Posted in Personal Finance