Short term loans and the borrowing options
When it comes to short term loans, there are several different ways in which money can be borrowed if required. A short term loan is defined as a loan which is short term and high cost. The cost of these loans are reflective of the period of borrowing in that these loans serve small loans which are typically repaid over a period no longer than a year. Short term loans are designed to allow consumers the ability to borrow a small amount of money when it is needed. Unlike more traditional borrowing resources which offer large amounts over extended periods, the short term loan should be turned to in times when a one-off cost is faced or an unexpected bill. These loans, given the costs they carry will not prove useful if used consistently over a long period of time and therefore for on-going costs. Such cases would be better served to look at a specifically designed long term financial agreement.
The key with short term loans borrowing is ensuring the reason for borrowing is fitting to the product and that the product itself is therefore realistically affordable. For consumers who find themselves in a position where borrowing of various natures is required regularly in order to ‘survive’, this may indicate a bigger problem. Fundamentally borrowing should occur when it is affordable to do so in a manner which is considered, Lending stream and planned. As such, borrowing should not be used as a means for maintaining costs which are costs normal living costs. This includes the likes of rent, water or even travel. If this is the case it would be worth investigating the alternative support networks which are available, such as the CCCS. The CCCS is a charity based organisation who will offer free and impartial based advice to consumers who need support with their existing commitments.
Short term loans are offered in a range of different repayment terms in an effort to ensure there is choice and flexibility within the market place. Depending on the needs of the individual there are loans which allow repayment to be made as a one-off or spread over a number of months. The repayment terms offered mean it is easier to select a repayment amount which can exist comfortably within existing budgets. In order to ensure the right resource is selected for short term loans borrowing it is important to openly and honestly assess your existing budget and make an informed selection based on the information it provides. This means listing all existing expenses and the costs they carry every month and ensuring there is adequate disposable income available in the budget to make the repayments set out in the loan agreement. Take for example a consumer who has on average, £300.00 spare income each month but needs £400.00 for a new washing machine. The repayment amount and therefore term agreed needs to fit comfortably within the amount of £300.00 in order for the suggested loan option to be deemed as truly affordable.