Steps to Obtain a Short-Term Loan
Short-term loans provide an interim solution to money issues ranging from a medical emergency or paying for a vacation. Although different lenders have varying criteria for granting out short-term loans, the main steps are the same:
- You approach a lender and state the amount you want to borrow for the short-term loan.
- The lender calculates the total amount you will be expected to pay after all the interest has been worked out.
- You agree to the length of time it will take you to repay the loan in full.
- You get your short-term loan and repayments begin.
These steps highlight a broad overview of how short-term loans online work. Credit unions and banks are also sources of personal loans for consumers. However, the most common sources of short-term personal loans are payday lenders.
These lenders offer cash advances until you can pay it back all at once during your next paycheck. Because of the high interest rates often associated with these loans, most states strictly govern these lenders’ terms and conditions.
Various Types of Short-Term Loans
There are various types of short-term loans, with differing terms and conditions. Here are some examples of short-term loans:
- Doorstep loans
- Online installment loans
- Text mobile loans
Applying for a doorstep loan is a straightforward process. As part of the short-term loan application, you will be asked to complete a credit check. Upon acceptance, a representative from the lender’s company will complete an Affordability Assessment to ensure you can afford to repay the short-term loan.
Once it is confirmed that you are comfortable with the short-loan terms, you will be expected to repay the short-term loan back in affordable amounts every week. The lender will organize for someone to collect repayments at a date and time convenient for you.
Short-Term Online Installment Loans
Installment loans are another type of short-term online loan. The loan amount of installment loans is usually under $2,000 and can be available even to a borrower with a low credit rating. The main characteristic of a short-term installment loan is that payments will automatically be withdrawn from your bank account.
When Should a Short-Term Loan be Paid Back?
Regardless of which option you choose, it is always vital to make timely repayments on a short-term loan by the date agreed between you and the lender. Failure to do so accrues high-interest rates, forcing a borrower to sink deeper into debt.
In the same breath, it is always vital to inquire what fees will accrue on a short-term loan in case you fail to repay the principal on time.