What are Short term Loans?
These are generally cash advances provided by a lender to a borrower. Generally, such loans are taken out online over a short-term basis which can be for a lending period of a few days up to 12 months.
How do they Work?
Getting a short term loan is very straightforward. After taking out one, you will be required to pay for it within the stipulated period in regular instalments. One has the option of paying off the loan early before the loan agreement ends since the longer you take to repay, the more you end up paying. Most lenders use an online application process where you will be required to fill in your personal details. Once this is completed they will go ahead and perform the necessary checks before approving or rejecting the loan. This process is generally computer automated these days meaning a decision is usually made very quickly, in some cases minutes. If your application gets approved, you can get the money deposited in your account within a few hours depending on the lender.
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Types of Short Term Loans Available:
Payday – These are taken out over a period of no more than 2 months with 1 scheduled repayment. They are referred to as Payday loans as they are generally paid back to the lender on the borrowers Payday. These types of loans generated lots of bad press over the last few years due to many Loan companies lending irresponsibly. Luckily for everyone the industry has since been cleaned up and only those who are lending responsibly to people who can afford to repay their loan have managed to gain permission from the Financial Conduct Authority (FCA) regulator to remain lending.
Instalment – Fast Loan UK are proud to be one of the pioneers of the online short term instalment loan. These are generally lent over a period of 3-12 month with set monthly repayments. We are proud to be able to offer one of the most flexible instalment loans on the market. Customers of ours can choose to make weekly, fortnightly and monthly repayments based on their unique set of circumstances. Our repayments are also flexible and are not set in stone. Customers will never be charged for missing payments and all of our customers get assigned independent Customer care managers who will assist them in working out suitable loans based on their own specific set of requirements.
Such loans are now subject to an industry wide interest rate cap. The maximum daily interest rate is 0.8% a day, and the borrower of a short term loan will never pay back more in interest than 100% of the initial loan value.
Where many of the most prominent lending brands opt to charging this maximum daily interest charge, our average daily interest rate is a great deal lower than this.
Why are these types of loans expensive?
Because of the high risk nature of this type of lending borrowers will generally pay a higher rate of interest than they would with a conventional long term loan. This is because these loans are a form of unsecured borrowing. This means the lender has no security against the loan itself. Therefore, if a borrower decided not to pay the loan back, then the lender could not simply take possession of the borrower’s home or property in return. Lenders therefore charge higher interest rates to their customers due to the increased exposure to risk of non-payment and bad debt.
We mitigate against this risk by carrying out credit and affordability assessments. We also build strong bonds with our customers and friendly relationships. This is why our lending is generally cheaper than many of our competitors. If you require more information on borrowing or expert advice, please contact the independent moneyadviceservice.org.uk.
Advantages
• Immediate access to funds when you are in urgent need or suddenly face unexpected expenses.
• Short term loans are quick to obtain, often funds can be deposited to your bank account in hours if you are approved.
• They are flexible since you can pay over a period of time in instalments or in a lump sum.
Disadvantages
• Short term loans especially if you have bad credit can be costly compared to other credit facilities due to higher interest rates.
• Some direct lenders incorporate additional fees which makes the cost of borrowing higher. Please note, Fast Loan UK is a transparent lender, regulated by the FSA and does not charge you additional fees.
Is the type of borrowing for me?
When taking out short term loans like this it’s important to think carefully about your circumstances and whether you can afford the repayments. You need to ask yourself whether borrowing the money is going to help plug a hole in your immediate financial situation, without causing you more trouble down the line. There is no point in prolonging long term financial problems with loans of this nature, as it could just make the problem worse later on down the line.
If you think you are experiencing financial issues and struggling to pay your bills and manage your debt. We would advise you seek free and independent advice from debt charities. In addition, always check your credit rating with credit check providers.
Apply online today for short term loans by clicking here.
Representative loan amount example: Borrow: £600 over 5 months. 5 repayments of £194.81. Total amount payable £974.04. Interest rate: 292% pa (fixed). Representative 907% APR.