If you are in need of access to cash quickly, then a short-term loan could be the perfect solution for you. They can also be referred to as payday loans, with the intention that the extra cash you receive can be used to tide you over until your next payday. It’s no secret that unexpected expenses can crop up all the time.
Perhaps your car registration is due and you don’t have the funds. An unexpected medical bill might crop up. You could find yourself in an accident and unable to pay for repairs. They work as personal loans that need to be paid back relatively quickly. Short term loans can also be used for businesses that need access to capital. Once again, the idea of these loans is to provide a quick cash injection that can be paid back once cash flow improves. So what is a short term loan and how does it work?
What Is A Short Term Loan?
Are you wondering what is a short-term loan? These can also be referred to as payday loans, where you can borrow any amount of money, usually up to about $2,000. They are generally expected to be paid between 16 days and a year. The idea is simple, they offer you access to some extra money for a short period of time. As a result, these types of loans do work differently to regular loans.
What is a short term loan?
The fees and charges on short term loans are one of the main things that set them apart from other types of loans. These can vary from lender to lender, but can reach these amounts:
- A one-off establishment fee of 20% of the amount loaned.
- A monthly maintenance fee of 4% of the amount loaned.
On top of this, there are extra fees and charges that the lender can charge you if you fail to meet the repayments or payback the loan. Short term loans do end up being more expensive than other loans. You are essentially paying for the convenience of being able to access the money you need as fast as possible.
What Is A Short Term Loan Good For?
There are many different reasons you might look at taking out a short-term loan. Wondering what is a short-term loan good for? Here are just some that might crop up:
- Moving expenses: hiring a moving truck, paying an end-of-lease cleaner and paying bonds can all add up.
- Car repairs: whether you have been in an accident, or your car has simply broken down, repairs can be expensive.
- Furniture: if you have just moved house, you may find yourself out of pocket paying for furniture to fill it up.
- School fees: these usually come out in blocks, which can push you into debt if you don’t have the cash on hand.
When it comes to businesses taking out short-term loans, they usually apply to small businesses in need of a quick cash injection:
- Buy stock: if you have a busy period coming up and want extra stock, a short-term loan can tide you over.
- New clients: bringing new clients on board can be expensive, and usually, the cash comes at the end. A short-term loan can give you the money you need.
- Growing your business: if you are looking to grow, then a short-term loan can give you access to the funds to make it happen.
Types of Short Term Loans
When it comes to exploring what is a short term loan, it is worth noting there are a number of different options available to you.
- Credit card: if you only need a small amount of money, this can be a great option. It is flexible and has lower interest rates than a payday loan.
- Personal loan: personal loans give you more time to pay back the money, and you have access to more money than payday loans. They can take longer to apply for and to get access to the cash.
- Payday loan: this is a fast way to get cash and doesn’t require much paperwork. It does come with the large fees discussed above, so it pays to shop around.
Applying for a short-term payday loan is very simple and can often be done online. You will need to provide proof of identity, recent payslips, bank account statements and a utility bill confirming your address. Your application is usually approved very quickly, so you have cash in hand within 24 hours.
Taking Out A Short Term Loan
Are you looking at taking out a short-term loan, either for you personally or for your business? Australian Lending Centre can help you out. We will find the right loan for your specific needs to help you get access to the cash injection you need as quickly as possible.
