Your Guide to Short Term Loan Lenders
What Is a Short Term Loan?
A short term loan is a type of loan where you can borrow a smaller amount of money and must pay it off usually within a few months. Startup businesses that weren’t able to qualify for a commercial loan may choose this option to pay for inventory or to expand. Individuals also choose these if they aren’t able to get a personal loan. Individuals may also choose these loans if they have bad credit or aren’t able to qualify for a credit card. Short term loans are relatively easy to get and almost anybody with a checking account qualifies, but this means that interest is higher than other options.
Reasons to Get a Short Term Loan
One of the most popular reasons someone would get a short term loan is to consolidate their credit card debt. When you have extensive debt your credit score might be too low for a decent loan. So you could use a short term loan to pay off all your debt, and then work to pay off that loan. There are other reasons people choose this option including costs for home repairs, car repairs and even for starting a business. Essentially, short term loans can be used for anything that you would get a regular loan for but the interest rates are higher due to the fact that almost anybody qualifies.
Short Term Loans Versus Credit Cards
Short term loans are different from credit cards and the debate about which is better to use when you need money in the short term is ongoing. Some individuals may choose a short term loan even if the interest rate is higher than for a credit card. This may be because the amount needed exceeds the total you can borrow from your card. There are also individuals who don’t have a credit card due to a low credit score. Some short term loans are actually easier to get than a credit card and you can get a higher amount as well.
How to Find a Short Term Lender
Unlike other types of loans, banks don’t generally lend out on a short term basis. If someone is seeking this type of loan, they’ll need to go through a short term lender. There might be some companies that do this locally but it can also be done online relatively easily. There are dozens of companies online offering short term loans with fast approval. When choosing a lender, be sure to check the interest rates, payment due date and the reliability of the company. You should also check the approval requirements. Some companies offer much better deals than others so comparing is important.
Reasons to Avoid a Short Term Loan
A short term loan is meant for short term purchases only. If you’re denied a larger loan getting a short term one isn’t a great idea. After all, you were denied a larger loan for a reason and banks typically know what they’re doing. Another reason to avoid these loans is if you don’t have a plan for the money. If you can’t pay them off quickly, they’ll acquire interest and put you in a financial hole. You should also avoid these loans if you qualify for a bank loan with a lower interest rate. The majority of people won’t qualify for bank loans however, which is why people choose short term options.