Practical Reasons to Apply for a Short-Term Personal Loan

Many of us have found ourselves in unexpected financial difficulties since the onset of the Coronavirus pandemic due to unemployment or the furlough scheme not paying enough of our wages to live off. Those that are self-employed find themselves with no help at all and yet everybody has the same bills to pay as they had before the pandemic.

This has all meant that many people are looking to take out a short-term loan to tide them through this difficult patch, however, often people are taking out loans for the wrong reasons, rather than thinking the situation through. Here we are going to take a look at the practical reasons for taking out a short-term loan.

They Are Available At Short Notice

Traditionally when we are looking to take out a loan we have to apply through one of the major high street banks. They will often ask us pages of questions and will want to know every single detail about our personal situation, and even then they will take an age to reply and may refuse the loan for no good reason. The advantage that short-term loans have over traditional loans is that they are available quickly. In most circumstances, you will be required to give a few personal details and then your application will be assessed within the same day, and if approved funds will be sent over immediately. For those needing funds at short notice to pay an unexpected bill, these types of loans can be a lifesaver. 

They Are Unsecured

When you take out a mortgage or a loan to buy a new car, for example, it will be secured against your house or the new car that you are going to buy. This means that if you fail to keep up with your repayments for any reason, then the bank will be at liberty to take possession of your house or your car. With short-term loans, they are never secured against anything which means should you have repayment difficulties you will not face losing the roof over your head. Remember though, short-term loans often have high interest rates and penalties if you miss repayments, so always make sure that you can repay what you borrow. 

You Can Use Them For Anything

When you apply for a loan through a traditional lender they will ask you why you want the loan and what you are planning on using the funds for, whereas with a short-term loan they will never ask why you want the funds and you are therefore at liberty to spend them as you see fit. Whether you are looking for short term lending options to pay a utility bill or to repay a friend who has lent you money, you can do so without any recourse. Obviously, given the costs associated with a short-term loan, it should only be taken out as a last resort, but it is better to be in a position to borrow money when you need it, rather than being unable to borrow at all. 

There Is A Choice

There are actually several different types of short-term loans that can be taken out. Payday loans do what their names suggest as they are designed to lend small amounts of money that will be repaid when you receive your next paycheck. Alternatively, you could opt for an installment loan. Typically you can borrow up to £1,000 and you will have a term of up to a year, and when you take out the loan you will be able to decide when you make installment repayments allowing yourself to plan for the future. The third type is a doorstep loan and these are designed for people without bank accounts, or whose credit rating is so bad they cannot get a loan elsewhere. Someone will come to your door with the funds and then will return weekly to pick up capital and interest. So in effect, there is something for everyone in this market.

As we have discovered there are several practical reasons why it makes sense to apply for a short-term loan. If you need funds urgently they are perfect as a decision will be made within a day and funds will immediately be transferred to you, and they are unsecured so you do not run the risk of losing your home or your car. No questions will be asked when applying for the loan so you can use them for any purpose and there are several different choices between the type of short-term loan available, so there is something for everybody. Just remember, make sure you can afford the repayments before you take out any loan!