Should You Get a Short-Term Loan From An Online Lender
Financial emergencies happen all the time. Sometimes you are better prepared for them than others. When you are in sudden need of money, which you do not have for some reason, there are several ways in which to obtain the money.
One of the most effective ways is to look for easy-to-get short-term loans to fill the gap that you need. There are many nay-sayers out there who would argue against short-term loans, but when you need the money and have a plan to repay the loan ASAP, then the arguments against the loan starts to fade in comparison.
What is a short-term loan?
As the name suggests, a short-term loan is one that is paid back over a much shorter period of time. These loans are typically taken out to cover a personal or small business expense.
Before the loan is approved, the interest rate and the length of the loan contract is decided on. Short-term loans are typically paid back over the course of a year or even shorter periods. It is very rare for these loans to be paid back over a longer timeframe.
Why get a short-term loan in the first place?
For the most part, we are in complete control of our finances and can balance our income against our expenses. But life happens and the unforeseen can quickly turn a solid budget into a nightmare.
This is one of the instances where a short-term loan comes in handy. Being able to bring immediate relief when there is no other option. A short-term loan is not something to use every month on a whim. It can also be seen as an emergency fund that is readily available when the need arises.
Short-term loans are not exclusive to personal use either. Small businesses who are in their growing years often find that cashflow can restrict their growth. The short-term loan provides them with the needed funds to pay suppliers or staff when there is money that needs to come in.
Any successful business owner will tell you that cash flow was one of the biggest challenges that they faced in the early stages of their business. If not for short-term loans, their businesses would likely not have survived.
Getting an online loan
Of all the ways to get a short-term loan, applying for and acquiring one from an online lender is the most effective way. The whole process is done online and everything from the application process to having the funds deposited into your account can be done in minutes. There is no need to go to a physical lender or your bank to procure the loan either.
Seeing that short-term loans are not massive amounts of money, people generally do not have to go through credit checks and provide endless amounts of paperwork for the loan to be approved. When emergency strikes, you do not always have the comfort of waiting a couple of days to get the cash in your hand.
One of the best advantages of applying for a short-term loan from an online lender is the payback timeframe. Personal loans can end up costing thousands of dollars in interest because they are paid up over a longer period. Short-term loans generally have higher interest rates, but because you pay it back over a much shorter period, you do not feel the impact of the interest.
Other forms of short-term loans
Having a good credit score always counts in your favor, especially when it comes to your credit card. You can easily get a cash advance on your credit card when the need arises, but the costs involved are generally higher.
You could expect to pay around 3 – 5 % per transaction fee and up to 25% on interest for the loan. These figures might sound a bit excessive, but when you factor in the convenience of these transactions and the time it gets to have your money available, it is a solid option that can save you a lot of money in the long run.
Digging into your home equity
This is one of the longer borrowing methods, but it can still get you out of a bind when a small short-term loan cannot cover your costs. The great thing about a cash-out refinance is that the repayment of the loan is added to your home loan. That is because you are essentially taking out a bigger loan on your house and refinancing it.
With good discipline, you can repay the loan in a relatively short period of time by paying off extra capital on your house. The best part about these types of loans is that the interest rates are the best. When you look at the interest you pay on the house vs a credit card, then it is a no brainer. The process takes a bit longer, but you win all the way on interest.