$100 to $25,000 by *
A short-term loan is not what most people consider a traditional lending option’, although they are much more popular now than they ever have been. But what we mean by that is they are different from a typical loan, credit card or any other historic form of borrowing.
As the name suggests a short-term loan isn’t designed to be a long-term commitment. They are normally rather small sums of money, giving the borrower a quick cash injection when they need it. Allowing them to resolve any sudden financial issue they may have, then pay back the loan at a later date.
One common form of short-term loan is a payday loan, so called because the borrower only usually needs the money until their next pay packet enters their bank account. However, there are plenty of other forms of short-term loan, many of which can be paid back over a longer period of time if required.
Short-term loans are usually smaller sums of money too, usually under $1000. In fact, a short-term loan of close to $1000 would be considered a very high amount. Typical amounts are closer to $100 or $200 but can be higher depending on the circumstances. Smaller amounts are generally easier for the borrower to find and pay back, and their salary tends to provide enough every month to do this. This is why payday loans have become so popular. The debt itself doesn’t really last that long, so is rarely a burden for the borrower.
We believe there are several main reasons why people apply for short-term loans:
Traditional loans often require the customer to borrow more than they need. They apply for a loan only to discover in order to be accepted they need to borrow a minimum of $1000, then pay this back plus all the interest that has accrued. Sometimes all we need is a couple of hundred dollars, borrowing more than this is not appropriate, nor is it the responsible thing to do. But more often than not we’re forced too due to the lenders minimum borrowing rules. Lenders know this, unless they make a certain amount of profit from the interest then the loan isn’t worth their time. This has become the norm over the years and short-term loans offer an alternative to this problem.
Ease and convenience are huge factors in explaining the booming popularity of short-term loans in recent years. Where traditionally if we wanted a loan, we’d need to make an appointment at the bank, turn up, plead our case and then wait for a response in the main. No longer. Short-term loans are often approved (or in some cases denied) there and then. The vast majority of them are arranged online and the money can be in our bank accounts later that same day in some cases.
Some customers, for whatever reason, may suffer from a bad credit history. And if that’s you then trust us, you’re not alone. But the issue is; this puts us off asking for credit from traditional sources, we already know what the answer will be. But a short-term loan company is likely to be much more lenient. Providing you can demonstrate the ability to pay it back, they often turn a blind eye to your credit history. This helps people arrange and pay back finance again, building their credit files back up over time. Without the possibility of a short-term loan, they may have struggled to do so.
This is perhaps the most common reason for a short-term loan. Something somewhere has gone wrong, and they customer needs a few hundred dollars to resolve the crisis. It may be some urgent home or car repairs, but whatever it is, it cannot wait until payday. And the customer has no savings to fall back on. What options do they have? A short-term loan is often the answer to their prayers. It allows them to resolve the problem and pay the money back when things have calmed down. Essentially, it’s a service you use as a safety net when life throws one of its random curveballs your way.