Short Term Loans Direct
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If you’re in need of money fast, you’re probably considering short-term loans because they offer an appealing rate of approval when you need money today and the promise of fast funding. Long-term loans can offer larger loan amounts but they’re also more difficult to be approved for.
Plus, most large long-term loans will come with a hard check on your credit, which could further damage your credit score just in that step alone. As such, even the thought of applying for a long-term loan when you have less-than-perfect credit seems completely counter-intuitive.
Short-term loans are less of a commitment for both you as the borrower and the lender, as the party who is trusting you to pay them back. The longer they have to trust you with their money, the bigger the risk is of you not paying back the full amount.
Alternative lenders offer short-term loans to people with poor credit because it’s not a huge risk for them to collect what they’re owed over the course of three or six months, with a smaller loan amount given out and a higher interest rate charged. The lower denominations of short-term loans mean that they’re not ideal for major financial problems and are more ideal for covering temporary cash flow issues.
Short-term loans offer fixed repayment amounts and are usually available for a few months at a time, usually with a combination of direct debit and savings accounts. Loans that allow repayments to be accelerated are typically offered by banks, building societies, mortgage providers and mortgage brokers, while those that allow repayments to be delayed are typically offered by consumer credit advisers and savings banks.
Short-term borrowing needs include loans for work, cars, holidays, money for savings, investment in property, overseas trips, interest-only repayments, and savings loans, and the list goes on. The growing population of alternative lenders knows that working and saving are the first steps towards a more financially independent life and aim to support applicants who have less than perfect credit.
Short-term loans are great borrowers who don’t want to make too big of a commitment beyond the near future. It’s never easy to know what kind of financial situation you’re going to be in next year or the year after that.
Getting short-term loans direct from the lender means you won’t be waiting days or weeks for your money to arrive in your account. In fact, many cash loan advances can be deposited into your account on the same day or within 72 hours of approval.
Lenders know that borrowers in this market are in urgent need of funding and they’re more than willing to compete for your business if you can show that you have the ability to repay the loan.
However, there’s a good reason why the lenders want their money back so quickly and are practically forced into charging higher interest rates. Approving people with poor credit means they are dealing with an excessive number of loan defaults. With so many borrowers not paying back their short-term loans, lenders have no choice but to charge the people who do pay a higher rate of interest to offset the inevitable losses that come with offering short-term loans to low credit borrowers.
The combination of rapid funding and approval along with high approval odds make short-term loans direct from the lender the preferred borrowing type for most people with credit scores below 700. If your credit is good enough to gain you pre-approval for larger, long-term loans like 30-year mortgages then you should be comparing those options as well. Even then, short-term loans come in handy when you only need to borrow a small amount and don’t want to put a lengthy burden on your budget for the foreseeable future.
Lenders can benefit from offering more short-term loans because it increases the overall flexibility of the financial services they provide. There is a tendency for firms to bundle short-term loans with longer-term loans in order to enhance the annual income of a loan as well as decrease the time required to repay the loan. Since they have smaller time demands on the part of their borrowers, those who have shorter-term loans tend to earn more, and those who have longer-term loans tend to earn less, relative to those with short term loans.
Loans are paid back within the fixed terms they are granted. A firm has the option of increasing the time period it will take to repay the fast loan. It is a good idea to check with your lender about your individual circumstances in order to tailor the loan to meet your needs.
In the short-term loan market, risk is not only welcome; it’s also a call for business. Today, people from over 100 countries take their money out of banks and invest it in less-regulated investment vehicles that earn an extremely high return over the long term. In just two years, three investment funds can generate a cumulative return of over $1,000,000,000.
“Real money” is at stake: millionaires are already seeing returns of 4% a year on their investments in the private loan sector, and that’s even in alternative sectors where borrowers can default as much as 25%-50% of the time. The best way to invest has always been to sell, and what you’re getting in return is great – that same rule applies to alternative lenders looking to cash in on all the borrowers who simply aren’t being serviced by the big banks and financial institutions.
In deciding whether to combine two lines of credit, consideration should be given to the frequency of payments as well as the duration of the lines of credit and the availability of regular periodic payments to the borrower. You should also consider your own creditworthiness when requesting the combination to see if you will need to apply for the loan on a secured basis.
If you’ve been thinking about getting a secured loan, keep in mind that you’re not really gaining anything financially in the short-term by doing that, so those kinds of credit lines are more useful for credit rebuilding.
Along those lines, you should also find out if the short-term loan provider will be reporting to the credit bureaus. If they do, you’ll want to make sure you make your payments on time to avoid damaging your credit score. Some of the alternative lenders that offer short-term loans do not report to the credit rating bureaus and will not have a positive impact on your credit score.
Even if increasing your score isn’t currently your goal, try to be selective about which lender you choose and opt for one that will help you build your credit once you’ve successfully paid off the loan – you’ll be glad you did later on.
Short-term loans offer predictability, which is great because when you can predict how much you’re going to owe each month, it will be easier to keep track of your finances. With a short-term loan, interest rates are fixed and predictable, so you don’t have to worry about what happens to your payment.
These loans are also good for new home buyers who don’t yet have their finances set in stone. Combining a short-term loan with a secured credit card is a good way to pay for your big or routine purchases because you’ll be building credit in the process.
While these loans may be high interest, if your credit is good enough, they won’t affect your monthly payment too much. If your credit is not so great, then you’ll probably pay a higher interest rate and, therefore, have a higher monthly payment.
If you can get a co-signor to help you out then you would probably face better approval odds and a higher line of credit as well as lower interest rates, even on a short-term loan. Of course, the downside is that a long-term loan would probably give you a lower interest rate, so it’s less expensive in the long run, but in terms of the overall amount you’ll owe, it will probably be larger with a long-term loan.
Focusing only on today’s interest rates or trying to calculate the total interest you’ll pay when you’re 70 to 80 years old will miss the larger picture. Most financial planners recommend spending some time learning about long-term financial planning, but it can be challenging at first.
One more thing to consider: How much will you need to save in the long run? Answering this question is not easy but understanding how you and your family will be planning for retirement can have a big impact on your budget. Try to remember the pointers above as you get back on track after a short-term loan fixes your financial situation.