The concept of borrowing and lending is not a new phenomenon among New Zealanders and the global population at large. For instance, one may take a car loan to buy a car, a mortgage loan to buy a house, a student loan to acquire an education and credits cards to sort out your daily expenses.
A short personal loan is a lending product that has grown in popularity in the recent past. It is a valuable back up that comes in handy in case of an emergency or any other unexpected turn of events. As the name suggests, this type of loan is availed for personal uses and has a short term duration of between one and seven years.
Let us look at five important things you need to know about Short Term Personal Loans in 2019.
1. Short Term Personal Loans for General Purposes
You can take short term personal loans for any purchases or expenses deemed that exceed your credit card limit.
For instances, replacing an expensive household appliance or major repair in your home may be so overwhelming for your regular credit card. Other instances that this type of loan could be applicable include:
- Major significant events– A wedding, graduation, or baby shower can benefit greatly from this loan. If you are planning either and you have insufficient savings, a short term personal loan will save your day. It will cover expenses that are beyond your current savings and ensure that your event runs smoothly without any interruption.
- Emergencies- These unexpected costs include medical expenses due to injuries or suffocation. If you’re confronted with such an unexpected eventuality, then taking out this loan could be the best idea.
- Paying off other debts- You can use this loan to pay off your credit cards and other arrears. There is only one monthly payment and the interest rate is much lower than your other debts.
Some of these expenses can be too much for your normal credit hands and that is why it important to have this type of loan in your arsenal. You only consider short term high-interest loans when an unexpected expense comes up.
2. Unsecured Loan
The loan does not require you to place collateral when you borrow. However, the interest rate is higher compared to other secured loans such as mortgages and car loans but it can be a good option when you do not want a collateralized loan or you do not qualify for such.
You should be able to convince the lender that you will pay the loan in time and in case you default the payment, the lending agent can take a legal action to recover its money.
3. Reasonable Payment Periods
Contrary to popular beliefs, all short-term loans are not payday loans.
This means that while a payday loan is expected to be paid at one go, a short-term loan is more flexible and gives you more time to organize your finances and choose a repayment method that suits you the most. This flexibility and convenience make the loan to be attractive to a lot of people but as stated earlier, one needs to be rational when contemplating this type of loan.
The duration of repayment is on a short term basis and so you wouldn’t want to borrow a huge amount of money that would be a headache when paying back. In general, there is usually a limit on how much one can borrow.
Most lenders will allow borrowing around $5,000 but borrowers with excellent credit and high income can access up to $50,000.
In essence, the stronger your credit score the higher the amount you are likely to get approved for but remember moderation is the key.
4. Incredible Flexibility
When shopping for a short term loan, flexibility is a significant factor that you cannot overlook. It is important to consider the repayment periods and choose the one that will work the best for you.
For instance, lenders who offer their borrowers up to three repayment periods ensure that you are able to pay off the total amount in bits without having to go through the pressure paying huge amounts of money at one go.
This flexibility will enable you to pay your debt quicker without it taking an emotional or psychological toll on you.
5. Prompt Approval
Gone are the days when accessing a loan used to be a daunting and complex process.
Approval of loans required lengthy and detailed paperwork but digitization has made everything simple and less time-consuming. In addition, the different sites found on the website will allow you to compare rates and choose the one that suits your needs perfectly.
A favourite example of such a website is Loans 24, a leading lending website in New Zealand dedicated to bringing together lenders and borrowers from all walks of life in a mutually exclusive way. The platform takes to account the financial needs of the borrower and matches with the ability of the potential lender to come up with the solution that favours both parties.
Getting approval through the bank or your credit union can be hectic and that’s why many people are opting for online platforms due to the convenience and flexibility that they offer.
Ready to Borrow a Short Term Personal Loan?
A wide variety of short term personal loans are unsecured which makes them a great option for any person who does not qualify for a collateral loan. The only disadvantage is that these loans attract a high-interest rate mainly because of the enhanced risk encountered by the lender.
All in all, a short term loan is a quick fix for your unexpected financial woes and it is more flexible than the traditional secured loans.
The most important thing is to be prudent when borrowing this type of loan and ensuring that you choose a repayment plan that will favour your current financial situation. Conduct due diligence and ensure that you settle for a lender who has your best interest at heart.
For more information how you can get instant personal loans, check out our service page.