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So something just came up. Life didn’t go as planned and you find yourself with unexpected cash flow issues.
You don’t want to take on a long-term obligation to try to fix it. But you might want a short-term personal loan to help you cope while coming up with a more permanent fix.
What Is A Short-term Personal Loan?
A short-term personal loan is an unsecured signature loan that will be paid off in the not-too-distant future. They are usually going to be wrapped up in no more than a year, though they can be for much shorter time frames.
If you need a small amount and can pay it off in one lump sum very soon, you might be looking for a same-day payday loan. But these are very small loans that have to be paid off in as little as a few days.
If you need a bit more, such as a 1000 dollar loan, then you will want an installment loan. This will spread the payments out overtime to make it easier to swallow the cost.
How A Short-Term Personal Loan Works
You apply for a short-term loan online, in person at a storefront location, or over the phone. Depending on your state, you may be able to get one from any lender that conducts business locally. A lender may also be willing to work with you if you are unable to secure financing from your local bank.
If approved, the amount that you will receive is typically deposited directly into your checking account within minutes, but this could take longer during non-business hours. If the loan is for an amount less than $1,000, it can take three or more business days. For amounts that are greater than $1,000, it takes between three and five business days.
The amount of money you will have to repay is determined by the lender based on your income level. The lender also has the discretion to lower or raise this amount based on your ability to repay the loan. If you fail to make payments on the loan, the lender will begin taking legal action against you, including requesting an attachment of your wages, bank account, or property. They are also entitled to repossess your car.
The typical interest rate that a short-term loan carries is between 118% and 221%.
What Are The Types Of Short-Term Personal Loans?
There are two types of short-term loans:
1. Payday loan – This typically is unsecured and has a single payment due per month. It allows borrowers to repay an amount for between $100 and $1,000. The interest rate is higher than other loans because they are given out quickly, and the lender requires you to repay them on the same calendar day that you received them.
2. Deferred deposit loan – This is also called a “check advance” loan because it works like a check that is issued by your checking account through your bank, except that it typically is issued by an institution that allows you to take out small amounts of cash with no credit check required. The interest rate is also quite high.
Are There Any Exceptions?
There are some exceptions if you are able to qualify for a short-term loan. Your ability to qualify is based on your income level and whether your state allows payday loans.
How to Apply for a Short-Term Personal Loan?
- Research your options – You should familiarize yourself with the different lenders that you can borrow money from prior to entering into an agreement. Take time to research their rates, terms, and qualifications before you apply for the loan. This will help you secure the best deal available so that you can ensure that you are able to pay off your loan quickly and easily.
- Understand how it works – Before you take out a loan, you should understand how it works and what your responsibilities are as the borrower. When you take out a loan, the lender is able to garnish your wages or freeze your bank account if you are unable to make your payments on time. Make sure that you select a lender that will work with you to create an affordable repayment plan.
- Apply for it – To secure the loan, you must complete the application process by submitting the necessary paperwork online or filling out paper applications at a storefront location. You should expect to provide information about your employment status and income as well as other demographic information such as your age and marital status. You may also be required to provide them with additional documents such as recent pay stubs and copies of bills that verify that you live in the location you claim on your application.
- Wait for a response – After you provide the lender with the information that they requested, they will issue a decision as to whether or not you qualify to receive a loan. They will notify you either via phone call, text message, or email. If you do not hear from them after two business days, contact their customer service department and follow up until you get a response. If your loan is approved, the lender should deposit the funds directly into your bank account within minutes, but it can take longer during non-business hours. If you have taken out a deferred deposit loan that is bigger than $1,000, it could take between three and five business days to be deposited into your bank account.
- Repay the loan – After you receive the loan, you should deposit it into your checking or savings account. You will then have 72 hours to repay the loan. If you are unable to pay back the loan after 72 hours, the lender has legal recourses to take action against you.
- Pay off your loan – Follow up with your bank regularly to make sure that your payments are being made appropriately. Make sure that these payments are set to auto-draft in order to help prevent late fees and other penalties that will increase the amount of money that you owe on this type of short-term personal loan.
The Pros Of Short-Term Personal Loans
Short-term personal loans are generally expanded by lenders because of the high-interest rates that are offered. This allows them to make a profit when they choose to lend an amount to you which is greater than what you can afford.
However, if you manage to secure a loan with one of the top lenders in the industry, it could be one of the best investments that you make. They can be very lucrative when it comes time for them to pay off your loan.
The great thing about short-term personal loans is that they usually don’t require much documentation and approval form in order for them to be issued.
The Cons Of Short-Term Personal Loans
The interest rate associated with a short-term loan is very high. You may pay upwards of $1,000 or more just to borrow $500 for two weeks. If you are unable to repay the loan on time, you will incur additional fees and penalties. When you do not pay your debt on time, it can negatively affect your credit score, which stops you from qualifying for future loans of this nature. If this happens often, it could lead to bigger debt problems down the road because you will not be able to keep up with the payments on your larger debt amounts.
If you fail to repay the loan on time, you can also be declared in default causing the lender to take legal action against you. This could include requesting an attachment of your wages, bank account, or property. They are also entitled to repossess your car.
The high-interest rate associated with short-term loans can also cause borrowers to incur additional credit card debt that is deterring them from ever borrowing again.
How Do I Get A Short-term Personal Loan?
You can apply online. That’s one of the fastest, most convenient ways to do so these days. A same-day installment loan may even be transferred to your personal checking account in as little as an hour.
You will need to provide a copy of your ID. These are the most commonly used forms of identification:
- State issued driver’s license.
- State issued ID card.
- Tribal ID card.
- Military ID card.
- Student ID card.
You will also need to provide proof of income. Often, this means a recent pay stub or recent bank statement.
Stop And Do Your Due Diligence.
If you are in a panic, maybe take a short break and list your other options. Don’t apply for a short-term personal loan if it isn’t a good idea and don’t apply for more than you really need.
Look at other options, such as local food pantries or having a yard sale. If you have no idea how long it will take to fix your problem, be a bit conservative about borrowing money to get you through. You don’t want to just dig your hole deeper.
Apply Now For A Short-term Personal Loan at TheGuaranteedLoans
You can find what you need right here. TheGuaranteedLoans is a loan matching service and it is our job to help you find what you need.
In other words, we gather together information on a variety of lenders and their loan products to save you time and effort. You fill out a single online application with us and we check your info against our database of products. When we find a match, we let the lender know and they contact you.
FAQ
A short-term loan is usually for between two weeks and several months. The fact that you can take out a $500 loan for two weeks does not mean that this is the maximum amount that you can borrow or that you cannot repay the amount in this time period.
For example, if you are only able to afford to borrow $300 for one week, it doesn’t mean you are expected to pay back all three payments on the loan; it may be more practical to pay back one payment at a time.
Yes, short-term loans can be good for your credit rating. However, you should only take out a loan if you know that you will be able to pay it back on time and if your credit is already in good standing.
Generally, you should avoid taking out a short-term loan if your credit is bad. It may be more viable for you to try to save up the money that you need in order to pay for the expense that you are trying to finance or seek out small business loans through different lending institutions. This amount of money is probably very small in comparison to what you would pay in interest if you took out a short-term loan with bad credit. You can also apply for an installment loan or personal loan (no credit check needed) with bad credit.