When you are facing trouble dealing with your finances for whatever reasons be it medical illness or a sudden financial emergency, you may need money at the earliest. There is not much time left for you and at times you need the money in your account within 24 hours time. This cannot be possible with any of the bank loans because they have their set procedure and cannot offer you the approval so early. It is here that the short term loans work in your favor.
Short term loans are offered for a period which generally ranges between 15 days to an year depending upon the needs and the amount involved. There is some basic requirements which you need to fulfill in order to qualify for these loans. The applicant must have attained an age of 18 years on the date of application. They must be a permanent citizen of US and must be employed for a period of a minimum 6 months with their current employer. The applicants need to have a valid savings or a checking account which should be operational for the last 3-6 months. Even with a bad credit score you can apply for the short term loans, although the payment terms are going to be strict and the amount of loan you qualify for will also be less. Other than this the interest rates on these loans are relatively higher and once you are through with the deadlines you need to be sure that you have sufficient funds to take care of the repayments.
Loan application and processing
With almost all the lenders offering loans online, you can apply for these loans easily. The application form is generally a one-pager and can be completed within 5-10 minutes. With a little research you can find the lenders who can offer you better interest rates and terms. There will be lenders who will go ahead and offer some extension to you on the loans as well.
When we talk of the short term loans the one which strikes first is the payday loans. These are cash advances offered to the borrowers for a brief period of 10-15days generally extending up to the next payday. These loans come with an astronomical interest rate and have come in news for the high interest rates charged on them. One can get anywhere between $100-$2500 under these loans which can be put to any use without letting the lenders know about the same. One needs to be regular on the repayment due date missing which they will have to get their loans extended often referred to as the roll-over of payday loans.
The payday loans are only suitable when you have an emergency requirement which cannot be fulfilled with your limited resources. A lot of people take to these loans simply because they are easily available. Most of them use if for the fulfillment of their desires like vacations, purchasing household items and so on. When they can repay the loans on time, they can really enjoy the benefits even with the higher interest rates but things get worst when they have certain extra emergency situations which force them into get into roll over’s and also take multiple payday loans. This generally pushes them into a vicious cycle of loans all of which makes it a lot difficult for the repayment.
Disadvantages associated with the short term loans
One of the biggest disadvantages associated with the short term loans is the high interest rates on them. The interest rates on these the net lend loans are to the tune of 400-500% when calculated on an annual basis. However, if you have good relations with the lenders you can talk to them for an interest free period for the loan repayments.
At times even the credit card interest rates work out to be better as compared to the payday loans.