A clear approach to short-term lending
Short-term lending has been common practice for a long time, but with a lack of transparency from banks or lenders, often it can be hard to understand how it works and how you can be approved. In the wake of the current cost of living crisis, we think it’s more important than ever that people understand this form of credit.
Short-term lending is exactly how it sounds. You borrow a set amount of money with an agreed interest rate and repay it soon after, within a timeframe agreed upon with your lender through scheduled payments. What isn’t clear to some borrowers is how the different types of credit work and whether you pay interest on your debt too.
To provide a clear and honest view of short-term lending, we’ve prepared a guide that covers the different types of short-term loans available and what they mean for borrowers. Read on to find out more.
What are the different options for short-term lending?
These are unsecured cash loans that are often valued at a few hundred pounds. Someone will then come to your home on an agreed day to collect the repayment.
This is a plastic card that you can use to pay for items or services. You’ll then repay your debts when you can. The longer you wait, however, the higher your interest rates will be.
Looking into a short-term loan can help to give you some options. These allow you to buy goods and pay back what you owe at a rate and time agreed upon.
Why is it vital for lenders and brokers to be open and honest with charges and fees?
Hidden fees within loan agreements should be avoided to give borrowers the full picture of what this loan means for their finances. Lenders and brokers should provide a clear interest rate and the date that they expect the money to be returned. Otherwise, borrowers may end up in further debt.
What sort of tools can you use to make sure you’re prepared for a short-term loan?
If you’re worried about paying back your loan before taking it out then there are a range of tools you can use to make sure you know how much you’ll eventually owe or where to get the best deal from that’s right for you. Try these methods to ensure you have success with your loan.
- Use a loan calculator
- Budget your repayments
- Shop around to find the best rates
Taking out a loan is a major financial decision for anyone to make and having a clear approach and understanding what you’re doing is vital. Consider what type of loan best suits your situation and most importantly, be aware of what you’re getting yourself into.