Short Term Loans UK
A short-term loan is any type of loan that is paid back over a shorter period of time. Most short-term loans are to be paid back with in just a few months, but they can extend for several years, typically no longer than 3 years.
There are many different types of loans that are considered short-term loans, including payday loans, text loans, title loans, guarantor loans, and logbook loans, as well as, some types of personal loans, car loans, home equity loans, and debt consolidation loans. It is best to understand how short-term loans work and what your responsibilities are once you enter into a short-term loan agreement.
How Do Short-Term Loans Work
Short-term loans can be obtained from a variety of sources, including banks, credit unions, online lenders, and other financial institutions. When working with a bank or credit union, your personal credit score will have a lot to do with if you able to be approved for a loan and what your interest rate will be for the duration of the loan. If you have a poor credit report, you may have a very difficult time obtaining a loan from the bank without a co-signer. It may take several days or weeks until your loan can be process and the many made available. The interest rate used for your financing will directly depend on your credit score.
When working with many of the online lenders, such as those offering payday loans, and logbook loans, your credit rating is typically not used to determine eligibility for the loan. Instead, these companies will see that you have a regular source of income that shows you are able to repay the loan. For title loans and logbook loans, you will also need to show proof that you own your car. These companies transfer the necessary funds to your account usually within just a few hours or a day. The interest rate used for these types of loans is a set rate and is not based on your past credit rating. However, these loans usually come with an extremely high interest rate that means you will be repaying much more money then you originally borrowed.
There are many different advantages that are associated with short-term loans.
– Short-term loans offer one of the fastest way to obtain the funding you need, with some lenders providing your funds in just one hour.
– The application process for short-term loans is not as cumbersome as some other types of loans.
– Approval requirements are not a stringent, and in some cases, you only need to prove your source of income.
– Some short-term loans can be obtained from people with poor credit ratings.
There are also various disadvantages of this type of loan that should also be considered before obtaining any type of loan.
– Many short-term loans come with an extremely high interest rates and fees that will have you repaying much more than you borrowed.
– Short-term loans are usually only offered in small amount of under £1,000, but some can be obtained for up to £50,000 depending on your specific situation.
– The loan must be repaid in a shorter period of time.
– If you fail to make the necessary repayments, interest will start to compound and increase your debt even more. In addition, defaulting on the loan could destroy your credit rating.
All banks and credit unions in the UK offer short-term loans for qualified buyers. If you qualify, this will typically provide you with the best interest rates and payment plans, and is likely to be your best option. However, if you do not qualify for a loan through a bank or credit union, you may be forced to look at online lenders. Be sure to carefully review the terms of specialty lenders as the interest and fees associated with these loans may be very high. Also, if you default on your repayments, costs may skyrocket in addition to receiving a black mark on your credit rating. Great alternatives to short term loans are that of government and non-profit loans.
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