Lloyds Bank frequently conducts research to learn about the financial habits of society. One of their latest investigations found that 33% of the people surveyed do not regularly save money for a rainy day.
It is no surprise then that when we need a quick injection of cash, we need to find solutions away from our empty savings accounts. If you are one of the thousands of households considering short term credit, you need to read this first.
What Is Short Term Credit?
Short term credit is a fixed amount of money provided to businesses and individuals but is more typically aimed at members of the public. The amount of money provided can be very small or rather significant, but in all circumstances, the defining characteristic of this credit is that it’s expected to be repaid over a short period.
So just how short term is it? Most creditors have their loan conditions declare a period of up to six months for the credit to be paid back. However, many creditors will offer ways for it to be paid back much quicker, for example Wonga offers short term loans that can last up to six months repaid in monthly instalments. This gives customers the chance to get a loan quickly but pay it back over an affordable period. However the loan company permits early repayment with no repercussions, so you can lend the money for a single week and repay to save extended interest repayment, this flexibility is a major attraction to many customers who only need the credit for a short time frame.
Why People usually Require Short term Credit
Short term credit is often a solution to a financial emergency. For example, your family may need quick cash to pay for unforeseen:
- Medical costs
- Mechanical costs (vehicles and white goods)
- Temporary loss of income, such as during COVID-19
- Education expenses or vacations
- Building costs
Popular Ways to Get Short Term Credit
As mentioned earlier, one way of sourcing short term credit is through a short term loan. These are a specific type of loan that needs to be repaid in a smaller time frame compared to other loans. You can usually apply for these online and is one of the most popular ways to solve an urgent financial emergency. When applying, you will have to provide information to evidence that you can make the repayments over the time frame. If not, your short term loan could be rejected.
Other ways to get short term credit include:
- Getting a credit card
- Increasing existing credit card limits
- Asking for a bank overdraft or increasing your current one
- Asking friends or family for financial help
Key Considerations Before Applying for a Short Term Loan
There is lots to think about when applying for short term financial support. But there are two main considerations that should be at the front of your mind:
- where you will source credit
- can you pay it back
When looking for credit you naturally want to find the best deals. This means brushing up on your financial literacy if needed and taking your time to look for the best loan deals and options. Whatever you do, don’t frantically apply for lots of credit hoping money will fall at your feet. This can do serious damage to your credit file and prevent you from getting accepted. Moreover, it could result in multiple acceptances, and consequently, loans you cannot afford to repay.
But before you even apply for your preferred source of short term credit, you need to be 100% sure that you will be able to pay the money back in the time frame agreed. This could mean conducting a financial analysis of your income and spending to make certain what money will be available for repayments.
Don’t skip this step when applying or you could end up in debt!