Short-term loans and their advantages

Individual looking at empty wallet

Have you ever found yourself in a situation where you need access to cash right away? You may have an unexpected expense to meet and no savings put aside. Perhaps your car has broken down or your boiler might have packed in, weeks before you are due to get paid. There are a few solutions to this problem and taking out short-term loans online can help. Here’s why:

There’s plenty of choice

If you need short-term finance, there are several types of borrowing you can consider, such as:

  • Payday loans
  • Short-term instalment loans
  • Overdraft borrowing
  • Credit cards

Short-term loans are available online

It wasn’t long ago that you would need to apply for a loan with your bank or building society. Consumers had little choice and high street banks had the monopoly in the market, meaning little competition and higher rates.

Now, thanks to the internet, there’s an enormous amount of choice in the short-term loans marketplace. You are now able to search online for a short-term loan that meets all your needs and access the important terms and conditions clearly before applying, thanks to the Financial Conduct Authority (FCA) regulation of the industry.

Online tools such as comparison sites and loan calculators make it easier than ever to research the types of loans available and find one that meets your requirements, all from the comfort of your own home.

Short-term loans now offer much more flexibility

In the past, some short-term lenders developed a poor reputation. This was mainly for failing to carry out proper affordability checks on borrowers and allowing them to build up unmanageable debt. However, regulations on the payday loans industry have stepped up since then, and caps have been applied on the amount of debt you can build up using these types of loans.

Greater regulation has also led to more flexibility in the industry, with some short-term lenders now offering borrowers the chance to spread their repayments over a number of months. This helps borrowers spread the cost and reduces the risk of a borrower failing to meet repayments.

Applications are quick and easy

Applying for a payday loan or a short-term instalment loan online is quick and easy. Lenders will ask for a few pieces of information from you, including your employment status and/or income information. You will also have to provide personal identification. Some form of credit check is usual, although you may still be able to find a lender willing to offer you the money even if you have a poor credit rating.

The amount you can borrow and your repayment terms will depend on the individual lender and your circumstances and financial situation. It’s a good idea to limit the amount you borrow to the very minimum that will enable you to meet your needs. The more you borrow, the more you will have to pay back in interest, so only borrow what you really need.

You can get the money right away

When you apply for a short-term loan online, you can access money almost right away. If you decide to apply for an overdraft with your bank, they can often give you access to the overdraft on the same day, or at least on the next working day. Applying for a payday loan or instalment loan online can be just as quick.

Short-term lenders appreciate the fact that, for most people looking for short-term loans, time is of the essence. If they can’t get the money in their bank account within a day or two, it’s sometimes just not worth even applying. If you’re struggling to get by without hot water or you are suffering from a toothache and need to pay the dentist, you can’t afford to wait around. Short-term loans are often emergency money and many good lenders respond to this by making sure they get your cash to you as soon as possible.

You are protected

It’s vital that you opt to apply for a short-term loan with a lender who is registered and authorised by the FCA. The FCA has strict conduct requirements on short-term lenders and payday lenders, which help to protect borrowers. These include requirements to check you can afford to repay the loan. These affordability checks will take the form of establishing whether you have a regular income, for example.

And the protection doesn’t stop there. The FCA will also protect you if you come across difficulties when repaying your fine. There are limits on the total amount you will ever be expected to repay when taking out a short-term loan, thanks to the FCA. It also regulates repeat lending to try to prevent people from taking out loan after loan, without ever properly servicing their debts. This goes some way to protect borrowers from accumulating debt that they find unmanageable.

Short-term loans can be an effective solution to short-term money problems and can be used to get yourself out of a tight spot, financially. Just make sure you do your research and always borrow with a responsible lender.

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