Wondering how a short-term loan can benefit your financial situation? With any decision involving money, it’s important to understand what it is you’re embarking on and the potential impact of your actions. Let’s dive into the ins and outs of short-term loans…

What is a short-term loan?

To summarise, the difference between a short-term loan and a long-term loan is down to the amount of time it requires to pay it off, so be aware of what exactly is expected of you and when is key.

Short-term loans are a type of personal loan that is generally paid back within a short period of time. This may vary from a few weeks up to a year, depending on your credit provider.

Make sure you’re familiar with the terms and conditions of the short-term loan you’re looking into to avoid any surprises further down the line.

Advantages of a short-term loan

Short-term loans help to maintain cash flow struggles caused by personal circumstances. These types of loans can help cover unexpected expenses or emergency payments. There is also the advantage of improving your credit score too, assuming you can comfortably make the repayments.

In addition to this, you can receive the funds quicker because it is considered less risky. This is due to your ability to repay is less likely to be impacted over a shorter period.

So, if you’re facing an unexpected payment, you might consider getting a short-term loan for quick access to funds.

Things to think about before getting a short-term loan

It’s important to make sure you’re aware of the risks and considerations when getting a short-term loan, though. You must assess whether they are right for your situation by considering the repayments budget.

When deciding to apply for credit or a loan there any many factors to consider. It’s important that you’re able to make the repayments within the agreed time frame, or your credit score could be negatively affected.

Alternatives to short-term loans

Have you tried looking into other methods? Overdrafts are simple to apply for if you have a current account. Another option to consider is credit builder cards, as these may suit those with poor credit scores. This type of card limits the amount you can borrow while allowing you to make payments and improve your credit score over time.