These days, getting a loan can be a very easy process – all you’ll need to do is visit a private lender, bank or other direct lending agency, fill out some paperwork or an online form, and get the loan that you need. And with many short-term and payday loan options available today online with just a few clicks, getting access to emergency money when you need it has never been easier, or faster.
However, before you go ahead and apply for a particular loan that you need, it’s crucial that you consider some factors that will help you make the best decisions when you’re comparing different short-term loan options.
The Type of Loan:
The first thing to consider is the type of loan that you want to get. If you’re looking into getting a short-term personal loan, then all you’ll usually need to provide are your personal details, the bank account where you want the loan to be paid into, and your card details for repaying it – the lender will do the rest. In some cases, you may be asked to verify your identity with a passport, driver’s license or another form of photo ID.
Usually, people only apply for short-term loans when they are urgently in need of cash, for example, to cover an unexpected bill or to pay off an emergency expense that you were not planning for this month. Before you apply, it’s important to ask yourself whether or not a short-term loan is the best option for you. Could the purchase you hope to fund with it wait for another time to give you a chance to save up, or do you have a savings or a credit card that you could use instead? If the answer is no, then a short term loan direct lender could be able to provide the help that you need.
The Fees You’ll Pay:
Bear in mind that interest rates for short-term loans can be quite high as they are unsecured, which is why they should only be used sparingly and in the case of emergencies. Before you finalize your application for a short-term loan, it’s a wise idea to double-check exactly how much you’ll be paying in terms of interest when you make the repayment. This will depend on the exact APR provided by your lender plus the amount of money you have borrowed, and the time period you have in which to make a repayment. Generally, the longer you take to repay, the more interest you will need to pay back, so it’s always in your best interest to choose the shortest repayment term that you can afford.
Your Personal Finances:
Another thing to consider before you apply for a short-term loan is your own personal financial situation. Be very careful to make sure that borrowing any money will not put you in a situation where you’re going to struggle to pay priority expenses and bills as a result of repaying the loan.
It’s a good idea to take some time to go over your personal budget before you apply; this way you will be able to determine how much money you have coming in each month and exactly where it’s all being spent, allowing you to clearly see whether the repayment for your loan fits into this budget or not. If it doesn’t, then you should carefully consider whether this is the best option for you. Taking out a short-term loan that you cannot comfortably afford to repay could land you in a debt cycle, where you are taking out further short-term loans just to cover the repayment for the last one or to cover other necessary expenses.
Your Credit Score:
Another important question to ask before applying for a short-term loan is whether or not borrowing the money is going to have an effect on your credit score. While any borrowing is likely to damage your credit score a little bit at least at first, bear in mind that utilizing the borrowed money wisely by repaying it in full and on time can actually give your score a boost.
Another factor to consider is the current state of your credit score – how likely are you to be accepted by a short-term lender? If your credit score is good, then you should have no problem, but a poor or bad credit score may mean that you find it difficult to get accepted from the popular lenders; you may need to look into bad credit lenders instead. Bear in mind that making applications that you are rejected for can also cause your credit rating to take a hit, so use an eligibility checker tool wherever you can; this will help you determine which loans you are likely to get without affecting your credit.
Short-term loans can be a useful way to get some quick cash when you need it most, but there are plenty of important factors to consider before you go ahead and apply for one.
