Short term loans explained: What you should look out for
Short term loans are available through a number of financial providers. When you’re looking for a short term loan to tide you over through a small financial crisis, there are several places you can go for financial assistance before you decide to take out a short term loan.
The first place you should ask for assistance should be your personal bank, they may have other options available for you that don’t end in you taking out a high interest, short term loan. Banks can offer overdrafts, credit cards, and a plethora of loan types that you can use. You aren’t going to find a low interest short term loan, no matter where you’re looking; immediately expect high interest rates.
Ensure that the company you’re looking to lend from is fully authorised to lend to you. They should be authorised by the Financial Conduct Authority, and it should be simple to check this by looking on their website or emailing them for confirmation. As a UK resident, you should stick to UK-based loan companies, and never borrow from any lenders that won’t lend to you directly; avoid third-party companies, there’s no need for a middle man when you’re looking for financial help.
When you’re enquiring about a short term loan, you should check that there are no hidden costs. Read the fine print, contact the company, read the contract. Hidden costs are the worst thing about taking out a loan through an online financial provider, but they can easily be discovered before you secure your loan contract.
A short term loan is the perfect solution when you’re just looking for a little bit of extra money during a time where you’ve fallen short and find yourself needing to pay for something. They’re meant to be a short burst of cash, not as a long term solution to financial issues that you might be facing. You’ll be expected to pay back your short term loan in evenly spaced intervals – usually every month on a set day, where the loan plus the interest will be paid from your bank (this is typically done by direct debit or standing order).
There are several types of short term borrowing that are available form financial lenders:
- Credit cards, which are a good way to build credit as long as you meet your repayments before the deadline that your provider sets. You’ll need good credit to start with, and you should expect interest on top of every purchase that you make with a credit card.
- Interest-free overdrafts are an option that you may be able to get from your bank, so it’s worth looking into. Banks are usually a great place to start if you aren’t looking for a loan, per se.
- Flexible loans. Flexible loans encompass various types of loans, including personal loans, and short term loans.
Start your search by looking at reviews and customer testimonials, you’ll quickly be able to find a provider that you can take out a loan with to help you in your time of need.