How do Short Term Loans Work?
There are many people that might not be that familiar with how short term loans work. This is because they are relatively new onto the market and they are not something that is offered by traditional lenders such as high street banks or online lenders like Cobra Payday Loans. It is therefore the case that you might want to find out a lot more about them before you decide whether to take one out. This is a really good idea as you should know what you are getting yourself in to. You also should know about all types of loans because if you need to borrow money you want to choose from all of your options so that you know that you have picked the one that is the very best for you. So, knowing a bit more about short-term loans could be very useful.
How to apply?
So the first thing you may wonder about is how you apply for these loans. As they are not available from mainstream lenders then you will have to find them elsewhere. The easiest place to find them is on a website. You can search for short-term lenders on a search engines and you will be able to find a lot of them. Once you have a lender you will find that it is straight forward to apply. You will often have a choice of being able to apply online or on the telephone. There is a very unlikely to be any manual form filling which will be a relief for many people. If you phone then someone else will fill in all of the details for you and you will just have to verbally answer their questions. It is likely that you will need to send them some documents though, but these can normally be photographed or scanned and emailed to them, so it is really easy.
Who can apply?
Often with a loan, there are restrictions on who will be given one. Although anyone can apply, there will be some applicants that will be turned down. In the case of a payday loan, this will be limited to very few people. There are just a few restrictions. The borrowers have to be over the age of 18, live in the UK, have a UK bank account and a regular income. That is all they have to do and therefore most people will be allowed to borrow money. With mainstream or traditional loans, there are often other restrictions as well. Often the applicant has to have a decent credit record. This means that they have to be able to prove that they can be trusted with a loan and that they will repay it. However, a short-term lender does not do this sort of credit check. This is because these loans came about specifically to help those people that were unable to borrow money from anywhere else. It was noticed that those people might often need money in an emergency and they had nowhere to go for help which is why short-term loans started up. Therefore, they do not look at credit score as a criteria when deciding who to lend money to.
How much can you borrow?
The short-term lenders will not normally lend that much money. As they are often lending to people who have a poor credit record, they do not want to give them so much money that they will never be able to repay. Therefore, they often tend to lend between £10 and £1000. This is useful if people want to borrow for emergencies such as replacing a broken white good or paying an unexpected bill or even buying some food when you have no money left at the end of the month.
There may be other restrictions on how much you can borrow though. It is often the case that lender will only lend a larger amount to someone who has lent form them before. This is because they want to build up some trust with you first and make sure that you are going to be reliable, They will lend you a small amount and if you show that you can repay that, then they will lend you more. How much this is will vary between lenders and so you will need to check and find out whether the lender that you are thinking of using will be happy to lend you the amount of money that you want to borrow.
How do you repay?
It is really important to find out more about repaying, because not all loans are the same. Many short-term loans need a one off, lump sum repayment. This means that the borrower will need to repay everything they borrowed plus the interest all in one go. This is quite different to traditional loans where you repay in instalments This can have advantages though as it means that you will be able to repay the loan more quickly and get rid of it sooner. Some people really do not like being in debt and the idea that they can get rid of the loan and then be free of it really quickly can be really appealing. However, it is really important to make sure that you have enough money to be able to repay it. This is something that it is well worth researching.
