There may come a time when you need additional financial support to help you manage an emergency situation. A short-term loans direct lender can offer you funds to help you deal with a broken down car, urgent home repairs, or medical bills when you have nowhere else to turn. Their lenient requirements and easy application process make them a popular choice for those looking to deal with immediate gaps in their finances. Below, we’ll take a closer look at the advantages of short-term loans.
What is a short-term loan?
A short-term loan, as the name suggests, is a loan that is paid back over a short period of time, typically from around 6 months to a year. There are various types of short-term loans to choose from, with payday loans being one of the most popular. Short-term loans cover smaller amounts and should only be used to cover emergency expenses. Short-term loans can be offered by a range of lenders that are most commonly based online. So, what are the advantages of short-term loans?
Quick Access to Funds
As short-term loans are meant to be used to deal with temporary gaps in cash flow due to unprecedented costs, ensuring that borrowers have quick access to funds is a factor lenders take into account. Because of this, online short-term loan lenders make the application process quick and easy, allowing you to apply from the comfort of your own home. These lenders typically don’t need as much information as you may have to supply at a bank, and many will only ask for ID, proof of income and address. This way, you can complete your application within minutes, and benefit from fast approval rates so you can have money deposited into your account within 24 hours in some cases.
Easier to Qualify For
If you’ve struggled to qualify for loans in the past, you may be worried about applying for a short-term loan due to your credit score. But don’t worry, these lenders have more lenient approval requirements, and base their decisions on affordability rather than how you’ve managed your money in the past. If you can show your lender that you can afford to pay back your loan with a steady income, you’re more likely to be approved. This is another advantage that comes with short-term loans – you can benefit even if you have a low credit score.
As mentioned above, these loans are easier to qualify for, even if you have bad credit. Because of this, if you know you have the cash to pay off the entirety of your loan, including interest and additional fees, you may be able to improve your credit score. Paying off your loan each month, over a short period will show future lenders that you can manage your money, giving your credit score a well-needed boost to stand you in a better position. However, it’s essential you only do this if you’re sure you can afford the loan.
Less Long-term Debt
Short-term loans can be a good option if you’re not keen on the idea of getting into long-term debt, with a personal loan, for example. Because these loans are paid off over a shorter term, you don’t need to worry about it affecting your finances for years to come. A short-term loan can be used to meet immediate financial needs that may come with an unprecedented expense without having to worry about paying it off over the next few years of your life. This can then reduce further financial stress.