- 15 juillet 2020
Short Term Loans – Borrowers Should Be https://best-loans.co.za/self-employed-personal-loans Familiar With the Interest Rate Before Applying
A short term loan is an ordinary type of loan which is taken in order to support a short-term personal or business financial need. The loan entails smaller borrowed amounts, which can range from as little as $100 up to as much as several thousand dollars. Short term loans are especially convenient for people who find themselves with such a sudden, temporary financial difficulty. For most, the quick cash they need is often the result of some disastrous event which leaves them with insufficient funds to continue with their routine lives. This is where the short-term loans come in to help.
Https://best-loans.co.za/self-employed-personal-loans | The short term loans, also known as unsecured short term loans, feature a very simple and basic set of procedures
The borrowers simply have to sign up for an account with the lender. They make a single nominal payment to the lender on the agreed date, which is immediately deposited in their bank account. The payments are made on a weekly basis. In this way, both the lender and the borrower to benefit from the transaction.
The lender understands that borrowers are usually in urgent need of finances and prefer to receive the money as soon as possible. This is why the short term loans feature the quickest possible repayment schedule. Within as short as seven days, the borrower is able to pay back his borrowed amount.
But this benefit is not without its demerits. In most cases, the borrowers pay more than they need to repay. This extra amount, added to the original amount borrowed, results in a higher interest rate. With a high interest rate, it becomes difficult for the borrowers to repay the short-term loans in a shorter time frame. So, they opt for refinancing which serves as an extension of the original loan.
Before signing up for the short term loans facility, a borrower should clearly understand the terms and conditions.
However, refinancing cannot be avoided when a person has taken short-term loans. Here are https://best-loans.co.za/self-employed-personal-loans some key takeaways on how to deal with these longer term loans. Follow these key points to enjoy the benefits of the longer term.
He should also understand how much cash advance he can avail. It is better to bargain for a cash advance that will be lesser than the original cost. If the lender is hesitant to lower the rate, the borrower can try other avenues such as seeking the services of a professional. The lender may be willing to offer discounts depending on the borrower’s credit record and current financial condition.
Before embarking on short term loans, the borrower should find out if he can qualify for the same. Each lender will have its own requirements in terms of income and employment. A good source of information on short-term loans is the internet. Here, one can get valuable insights on various cash advance products offered by different lenders. It is also advisable to consult friends and relatives who may have availed short term loans before.
Most short term loans have a 30-day repayment period. However, there are short term loans that have a longer period of repayment. This is because many borrowers do not like to spend more than a month or two before repaying the cash advance. Hence, it is advisable to make sure that the repayment period will allow one to comfortably pay off the payday loans without much difficulty.
There are several factors that influence the interest rate on short term loans. Some lenders may charge a higher interest rate because they have a longer credit history. A shorter credit history implies a lower credit score, which implies a higher interest rate on the same amount of money. Similarly, a borrower may have a low FICO score and hence pay a higher interest rate on the same amount of money. However, there are some lenders that consider a FICO score while determining the interest rate on short-term loans.
It is better to opt for a secured short-term loan, where the borrower has to offer his property as collateral. In case of non-payment of the short-term loans, the lender can repossess the collateral. This increases the risk for the lender and hence, the interest rate on the long-term loans is slightly higher. Another advantage with secured short term loans is that the borrowers do not have to provide security for the loan. Lenders also do not have to check your credit history, unless you show them your property.
Borrowers who borrow short term loans to pay off existing debts should plan the repayment strategy well in advance. They should make sure they can afford the interest on the money and that the amount they have to repay each month is within their affordability level. This way, they will be able to ensure they pay off the debts comfortably by the end of the term. Once the term is over, the borrower has to make the payments on time. Otherwise, the lender may repossess the collateral. It is important to understand the repayment plan before approaching a lending firm.