Short-term loans are designed to allow borrowing money for a longer period than payday loans, enabling repayment in installments. They are often directed to people with a poor or bad credit history who would have problems obtaining a bank loan. This means that the interest rate is usually much higher.
These types of loans are similar to payday loans, except that they are intended to be repaid over a longer period, usually around one or two years.
What are the interest rates?
The interest rate on short-term loans is usually very high. Although these loans are designed to allow a longer repayment period than a loan repayment, paying back money at such a high interest rate can cause serious financial difficulties.
It is important to know how much a short-term loan will cost and how much interest you pay over the duration of the loan. As an example, if you borrow 600 dollars for 12 months and pay it back on time, you would pay back about 1100 dollars.
What happens if I fall behind?
If no payment is made, additional interest and fees may apply. If you don’t catch up, you’ll receive a default notification. This means that the creditor can take further action, such as transferring the debt to a debt collection agency or taking legal action.
It is important to take steps to settle the backlog before the situation worsens.
Do I need a short-term loan?
Taking a short-term loan to cover priority bills, such as rent, mortgages or service bills, can only make things worse. The best thing is to get unbiased debt relief and a practical solution to your debt problem.
Sometimes you may need to borrow money to pay for one-off costs, such as emergency repairs or maintenance, but before you decide on a short-term loan, you should consider alternatives to borrowing this way.
What are the alternatives if I have poor creditworthiness?
Many people use short-term loans because they have difficulty obtaining credit elsewhere or have bad credit. If you want to take out a loan, you should consider an alternative.
You can apply for a budget loan if you have been working on benefits for people of working age for at least 26 weeks and need to borrow money to pay for necessary things such as clothes, furniture or rent. You’ll usually have two years to pay back and the money will be paid into the same account as your benefits. Budget loans are interest-free and you can borrow from $ 100 to $ 1500 depending on your situation.
If you have a short-term loan and you are trying to pay it back, you should ask us about debt. Borrowing more money can start a cycle that leads to a bigger debt problem.