Though it is important to have an emergency savings account for rainy days, there are times in life when your savings is just not enough. A serious plumbing or electrical issue, an unexpected car repair, or even a few unexpectedly higher bills can throw your budget out of whack. When you’re in a jam, and don’t really want to lock yourself into anything long term, obtaining a short term loan might be a better fit.
What is a Short Term Loan?
A short term loan can also be referred to as a payday loan or a cash advance. These loans generally have minimal eligibility and approval requirements, which makes them much easier to apply for. A short term loan is generally a loan that is provided in an amount ranging from $100 to $1250. The loan agreement is typically for a short period of time lasting no more than about two weeks to a month. If approved, funds can be deposited into your banking account in minutes, according to lending network company, MaxLend.
What Are Short Term Loans Good For?
Short term loans are not an effective solution for those individuals who cannot afford to repay the funds borrowed, fees, and interest back within the agreed upon timeframe. However, short term loans can be ideal for those who have a financial emergency and cannot wait until their next pay day. For instance, a car repair might be necessary to get back and forth to work. If you have no other means of transportation, taking out a short term loan can be an option.
Tips When Securing a Short Term Loan
As a mindful spender it is important to take out short term loans carefully. Though they don’t require a credit check and can deposit in minutes without much paperwork, failing to repay in a timely fashion can actually backfire putting your household in more financial trouble. Below are some suggestions on how to be responsible when taking out a short term loan for emergency situations:
- Only take what you can afford to repay timely – while you might get approved for more than you really need you should not take out a larger loan than you can afford to repay. Interest rates and fees are more when you take out a larger loan and extending the payment options will only increase your out of pocket costs.
- Only borrow from a reputable lender – when it comes to filling out online applications for short term loans you don’t want to provide your personal information to the wrong company. You will be providing private details that may include things like your bank account information, social security number, place of employment, and address. Therefore, do a bit of research on the company first. Look at the company websites, consumer reviews, and social media accounts, such as this LinkedIn profile from Max Lend Loans to see how reputable they are.
- Pay the Loan Back Timely – the best way to get all of the advantages of a short term loan would be to repay the loan in a timely fashion. If you’ve signed a contract that requires you to repay the loan within 14 – 30 days, you want to make sure that you do this. However, if you find that you can’t afford to pay the loan back at once, many loan companies allow you to extend the loan by only paying an extension fee (usually the cost of the loan fee)
There are simply times in which you don’t have the money in your savings and pay day is just too far away. While you should certainly look into other options prior to borrowing funds, short term loans can be a simplistic way to get the funds you need in an instant. With easy application processes, flexible payment options, and instant deposits, short term loans could be your life raft when you’re trying to stay afloat. If short term loans is an option for you, remember to be a do your due diligence in researching the company beforehand and be a responsible borrower so that you can pay the loan back in no time.