In trying times, you may need a short-term loan to tide you over. These can be for a range of amounts, from 5000 Rs to upwards of 40,000 Rs, and can be for several reasons. You may need urgent repairs on your home or car, an unexpected bill has arrived, you require a deposit for a new flat rental, or just need to get through to the next payday. If you are considering a short term loan then read this guide so you know what to look out for.
Choosing The Right Option
Treat a short-term loan like any big purchase and feel free to shop around as there will be a range of options to better suit your own situation. The interest rate should be the first thing you look at yet other fees and extra costs could be involved that all add up. In the meantime Services like Loanme allows you to obtain a secured short-term loan in a matter of minutes, and you don’t have to worry about keeping collateral to receive the loan. If you need money urgently, an online loan may be your best option.
Secured And Unsecured Loans
Be careful about whether the loan is secured or unsecured. If your idea of a short-term loan is simply to get some short-term funds then opt for an unsecured loan. This will be fixed at a certain interest rate though that will be based on your creditworthiness. However, a secured loan will be linked to your assets, including the value of your home, and can be seen as more of a long term commitment.
Ask yourself how much you need to borrow then be realistic with how long you need to be able to pay it off. Also, try to work the repayments into a budget so you can estimate how much you need to pay every month or so and when the short term loan is likely to be paid off. The short-term aspect of the loan itself should be less than a year yet they can continue for a little longer. Should you take longer than agreed to pay off the short-term loan then you may find yourself charged with large amounts of interest. This may change depending on the method of the short term loan you have taken out. If it is on a credit card you could use a balance transfer card for up to 36 months of interest-free credit. The repayment plan would include a minimum payment every month yet that would only be paying off the interest leaving the debt amount untouched. You should look to be overpaying any minimum repayments and always try to pay back a short-term loan quickly to avoid any extra fees and rising interest rates.
Consider Your Credit Rating
Whenever you are assessed for any sort of loan, your credit rating will be checked. This is how lenders judge how likely you are to stick to the terms of the loan. Put simply, those with a better rating will be offered better deals. If you are worried about your credit rating then there are several ways to improve it before you agree on the terms of a short-term loan. You should also look at the number of loan applications you have made in the past couple of years or so, too many in a short amount of time will not look good to a lender. Rejected credit applications also bring down your credit rating so you should not apply for loans or credit cards until you are fairly sure your application will be accepted.
By choosing the right option, improving your credit rating and sticking to a repayment plan you can use a short-term loan safely.