Short-term loans as the name suggests are loans which repayment periods are usually between 7 and 30 days. They are short-term loans that you can apply for and get cash on the same day.
These types of loans are quite appealing to those who have an emergency or unforeseen cash needs that cannot wait to be sorted out on the next payday. Short-term loans are granted against one’s paycheck meaning that the agreed-upon installments are automatically deducted from the pay.
Who can Apply for a Short Term Loan?
Almost every adult in Australia can be eligible for loans. This is the criteria lenders use to qualify applicants:
- You must have a source of income: This means you should be employed, receiving benefits, or have a form of income that is regular and dependable.
- Be over 18 years of age and an Australian citizen: Some payday lenders might offer loans to non-citizens as long as they live legally in the country.
- Have a bank account: This is important because the lender will require a bank statement as proof of a source of income, and if the loan is approved, it will be wired to this bank account.
- Have the necessary identification documents.
What are the Main Features of the Short Term Loan?
- Fast and Easy Application Process: Within minutes, you can fill in the application form and submit the required documents. The whole process is done online making it very convenient and fast.
- Fast Approval: Once you submit the documentation you can have the loan approval status within the hour.
- Same Day Service: Yes, you do not have to wait for days or weeks before you can access the cash. You can get the money the same day after submitting the application forms. This means that when you have an emergency, you can be assured of fast cash to sort it out.
- Suitable for those with a Bad Credit History: This is good news for those who cannot access loans from other institutions because of past money handling mistakes. Most short-term loan lenders take into consideration your current ability to repay the loan and not your credit history.
- Short Repayment Period: Most loans are payable within 30 days although some may have installment payments with a duration of up to one year.
- No Collateral Required: You do not have to bring security for the loan. This is one of the features that make the loan approval process fast.
- Ideal for accessing smaller amounts of cash mostly up to $2000.
It is not possible to apply for a short-term loan when you still have another personal loan to clear. The lender might want to make sure you do not have other pending loans by checking your credit history. Note, your credit score might not determine the loan approval status.
These features make short-term loans quite a bit more popular than bank loans. What is the difference?
- Bank loans take longer to be approved – This may be a few days to weeks, therefore not an ideal source of emergency cash.
- Bank loans have a more complicated approval process – You might have to present yourself personally to the bank, fill in and present more documents than those for a short-term loan.
- You can borrow higher amounts of cash from the bank – There is no limit to this.
- The repayment period for bank loans is more than that of short-term loans.
- Interest charged for short-term loans is higher than that of bank loans.
- Collateral can be required for bank loans. The more the amount of money you want to borrow, the higher the value of the item you want to use as security.
When Can One Apply for a Short Term Loan?
Almost all emergencies can warrant one to go for short-term loans. The ease of access makes them favorable.
- Medical Emergencies – It is important to keep some cash aside for unforeseen issues such as medical emergencies. Sometimes, if this is not possible, short-term loans can help you access fast cash to cater to your need.
- Money for Groceries – Some needs cannot be shunned or put aside such as the need to have a constant supply of groceries. When you do not have money for this, a short-term loan can be of help. You can borrow as little as $200.
- Emergency Repairs – When an important home appliance or equipment breaks down, a short-term loan can help you get it repaired so that things continue moving on smoothly.
- Business Boost – Most of the time, small businesses lack enough circulating capital. A little cash boost can make things move in the right direction.
- Irresistible Offers – You might come across an offer or discount on a product that you would not want to miss out on. When you do not have ready cash, a short-term loan can be a suitable choice.
- When you require cash to take you through until your next payday or have bills that cannot wait.
Types of Short-Term Loans
These are loans granted against one’s paycheck and payable on the next payday. They require no collateral.
Although they are still short-term loans, they require collateral because the amount granted is much higher than that of a payday loan. The repayment period could be of up to one year.
These are several loans that are consolidated into one for easier payment and lower interest rates. The repayment period can be up to 5 years.
Should I get a Short Term Loan?
Short-term loans are quite accessible. For this reason, you should be careful not to fall into a trap where you depend on the loans for your survival. You should only go for the services when it is absolutely necessary. In addition to this, first, check out all other means of accessing cash before you settle on short-term loans. Their high-interest rates and short repayment period can make you strain or fall into a lending cycle. Last tip, you should not apply for a loan in order to clear another one.