3 Things To Consider When Choosing Short-Term Finance Options

If you find yourself in need of financial help but able to pay the amount borrowed within a short period of time, then maybe a short term loan can in this case be a good option.

Since these loans are repaid over just a few months when you get your next paycheque through, you don’t have to worry about a long-term repayment plan or securing your loan against an asset like a house; of-course, as with any loan that you undertake, it’s important that you do your research and find the best choice for your circumstances.

We’ve pulled together three key areas to consider:

Do You Have a Plan for Affording Repayments?

3 Things To Consider When Choosing Short-Term Finance Options

Short-term loans can be a really useful way to plug a hole in your finances, but it’s important that you’ve considered how you’re going to repay the full amount.

While the term ‘payday’ loan may imply that you’ll have to pay back the entire amount in one lump sum on pay day, this certainly isn’t always the case, so if you’re concerned that one paycheque may not give you enough to cover your loan there are other options available.

Of course, these are still short-term loans, so the cost will only be spread over a few small monthly repayments. This means that you can consider your options and find a repayment plan that fits into your budget.

What is Your Credit Rating Like?

If you don’t have an excellent credit rating, then you might be worrying that lenders aren’t going to be open to giving you a loan.

In fact, with payday loans, bad credit doesn’t necessarily need to be a concern at-all; there are a lot of lenders out there who are more than happy to work with people who do not have shining credit ratings.

Are You Only Looking for a Short-Term Solution?

3 Things To Consider When Choosing Short-Term Finance Options

The final thing to consider is what you actually need the money for: while a short-term loan is a useful option in a lot of emergency situations, it won’t necessarily be the best option for a longer term financial need.

Some of the common circumstances that can be solved by short-term loans include unexpected costs like medical bills, broken boilers or important home repairs, funeral expenses or a sudden change in income that will be resolved after a month or two.

What you don’t want is to find yourself in a cycle where, month on month you’re relying on another payday loan to see you through, and if you do find yourself in a situation like this then it may be time to talk to a financial advisor and find an alternative solution.

With that caveat aside, if you know you’re just looking for a cash injection to tide you over and you’ve followed the rest of our advice, then you should be armed with the information you need to find an appropriate loan solution.

Every financial option has its pros and cons, and making it work for you is really just a matter of being sure that you have all the details pinned down and know exactly what you’re signing up for.

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Poppy is a money-saving expert in the UK.