Accepting any type of loan or increasing personal debt always involves some risk. Short term loans are no exception, but when they are used properly and obtained from a reputable lender they are a very beneficial method of getting cash. Here are some examples of when this type of plan is the best option for consumers.
Immediate Financial Need
A final decision on a bank loan could take days or weeks to receive. The application process involves excessive paperwork. Once the application is submitted the bank does a variety of credit and employment checks before they make a final decision. Companies that offer instant installment loans respond to their applicants within a couple of hours, and the money is available the following business day.
Low Credit Score
It is embarrassing to receive a rejection due to a low credit score. If finding a loan requires multiple attempts with several lenders it could lower the score even more. Each credit check from a lender could result in a drop of as much as five points. An additional penalty could occur if credit cards or other credit accounts are opened at the same time. Short-term lenders do not check credit scores or refuse people with damaged credit ratings. Approval is based on if the applicant has a checking account and verifiable form of income.
Quick Loan Payoff
Paying off a small bank loan could take a year of payments, or more. Every consumer has the right to pay their loans off early, but it is very tempting for many people to only pay the minimum amount required. The payments for short-term loans are divided over a six month period. The loan is paid off quickly, but the amount of the payments are still manageable for the borrower.
Always choose a lender that is upfront regarding their interest rates and fees. The contract should specify the total monthly loan payment amount as well as the starting and ending dates of the contract. Some short-term lenders, like Blue Trust Loans, even offer members-only deals that reward reliable clients with larger loan amounts, lower rates, and extended terms.