When You Need Them?
Short term loans are one of the most popular types of loans, mainly because of the benefits that this type of loan offers. However, while short term loans can offer financial help, like any type of loan, this option may not be the perfect solution to your financial needs. So, to know whether short term loans can offer you the best help, it is important to know the features of this type of loans.
What Are Short Term Loans?
Short term loans, as the term suggests, are loans with short repayment period. They come in two types and each of these types comes in various forms as well. Short term loans can either be secured or unsecured. Secured type of short term credits require a collateral and depending on how much you intend to borrow, the lender may require you to present a valuable asset like jewelry items, house, or car as collateral. While the secured type of short term loan is easy to obtain, this is definitely not the option if you do not have a collateral. An example of this is the type of credits that jewelry pawnshops offer. In this case, you put a jewelry item against your loan. The drawback to this type of loan is that, obviously, you are risking the item you present as collateral once you miss payments.
On the other hand, the other type of short term loan, which is the unsecured short term loan, does not require a collateral. An example of such short term loans is payday advances. With payday advances, you are not required to present an asset as collateral. In addition, unlike other types of credits, lenders that offer unsecured loans do not run credit check. So if your bad credit score hinders you from obtaining loans from traditional lending institutions, this type of unsecured short term advances can be your best option. However, as guarantee to the lender that you can pay the money back, most lenders require borrowers a proof of income. As long as you have a proof that you have a stable source of income, you definitely can obtain this type of loan.
When You Do Need Short Term Loans?
As mentioned, like any type of loan, short term advances may not be the perfect solution to your financial needs. Since these loans have short repayment terms, they are not for big financial needs. In addition, because most short term loans only allow you to borrow smaller amounts, this type of loan may not be the option to buy a car, house or pay off a big debt. Unsecured short term advances also charge higher interest rates than other credits, making it the last solution for huge financial needs.
If, however, you need financial help to pay an urgent medical bill and other bills and your next payday is still weeks away, the short term loans can be your best solution. With the short term loans, you do not need to wait for months for your loan application to get approved. In fact, with online lending companies, you can get approval for as fast as 24-48 hours! The processing is also hassle-free, as these online financial institutions process the application online. Your presence is also usually not required to obtain the loan. Online companies just deposit the money into your bank account once your application is approved.