We can try to be the best financial planners we can be. But things don’t go our way sometimes, we might become caught up in an emergency. It can be stressful when they come especially if we don’t have any money on hand, especially for small business owners. Fortunately, short-term loan providers can quickly give us the funds we need.
Short-term loans are convenient and offer appropriate loan repayment terms. As a result, they are an excellent choice for smaller expenses such as appliance maintenance, car service, or small company bills. To get the most out of anything, you must approach it from the appropriate perspective.
This article will provide us with more information about short-term loans and the things you need to consider before taking out one.
What is a short-term loan?
Short-term loans are a quick and easy way to solve an emergency or temporary financial need. Short-term loans allow you to borrow a little amount of money to pay for anything that needs cash immediately, such as medical expenditures, a laptop replacement, or past-due obligations. You then return the amount plus costs over an agreed-upon fixed duration, generally a few months for short-term loans.
The majority of short-term loans are unsecured loans, which means no collateral or security is required, unlike secured loans.
How do short-term loans work?
Short-term loans are loans that often range from $50 to $2,000 and can be paid in as little as 16 days or up to a year. Depending on the lender, the turnaround time for a short-term loan ranges from 6 hours to 48 hours, so it’s very convenient if you need money in a short amount of time. There are also fixed monthly fees and establishment fees for short-term loans. In any short-term loan agreement, the establishment fee should not exceed 20% of the loan amount, and the monthly cost should not exceed 4%.
How to compare short-term loans
When looking for lenders for short-term loans, there are various aspects to consider when you evaluate offers. This include:
- Loan term. If you’re looking for short-term loans, you should pay close attention to the repayment conditions they provide. Determine how fast you want to repay the loan and hunt for lenders who provide terms that meet your schedule. The shorter the length of your loan, the less you’ll wind up paying over time.
- APR. The APR offered by a lender may impact how much you end up paying over the life of the loan. The higher your credit score, the more likely you are to qualify for the lowest APR offered by a lender.
- Interest rate. The interest rates for short-term loans vary depending on the lender. You should research to discover the lowest-interest private lender or bank. Furthermore, you should be aware of how much money you truly require; do not overestimate. Borrowing more than you require will result in a higher interest rate. Some lenders may base the interest rate on your credit score. As a result, if your credit score is low, you may be charged a high-interest rate.
- Repayment terms. You should understand a lender’s repayment terms in-depth to know if you can manage them. Calculate how much you will need to pay monthly. Then, determine if you can repay in full within the set period. If you can’t, talk to the lender to increase your payment duration. This may increase your interest rate slightly, but you won’t struggle to meet your other needs. You can also choose to look for another lender whose repayment terms will work for you without adjustments.
- Eligibility requirements. Before applying for a loan, you should check with the lender about their eligibility requirements. Many lenders have minimum credit score requirements as well as minimum income standards that you must meet. Some lenders additionally consider a borrower’s debt-to-income ratio and how the loan will be used.
- Penalties and other fees. Many lenders charge borrowers origination fees, which are deducted from the loan amount. Late fees, prepayment penalties, and administrative costs are also to be avoided. Some lenders, however, avoid any costs, so be sure to read all of the conditions of a loan offer.
- Time of funding. The time it takes for a lender to deposit loan cash into your account varies depending on the lender. If you need your loan quickly, pay attention to how long the lender promises it will take for approval as well as how long it will take to get your money.
Here are 5 short-term lenders
Friendly Finance offers several types of loans. Their aim is to assist Australian customers in making educated financial decisions by offering timely content and relevant information on the most commonly used consumer finance products. All visitors can also use our free, no-obligation loan search. We provide both short-term loans of $100 to $5,000 and bigger personal loans of up to $15,000.
Cash Train is one of the leading companies committed to improving the Australian consumer loan business. Cash train allows you to borrow $200-$2,000 for short-term loans. They also offer small cash loans to people with bad credit. Their short-term loan application is quick and easy to complete, typically taking only 5 to 10 minutes to finish.
Once approved, your funds may be retrieved from your branch or sent straight into your bank account, allowing you to receive your loan as quickly as possible, typically on the same day.
CashnGo offers loans of up to $2000 (with a minimum of $300), with processes that guarantee you see all fees associated upfront, allowing you to make the best decision for you. Loan terms range from 2 to 4 months, allowing you to determine what is a reasonable timeline for repaying your loan. You can submit an online application 24 hours a day, seven days a week, and it takes about 5 minutes to complete.
For individuals who want to apply in person, there are 5 Self Service Kiosks located around Greater Sydney. In addition, CashnGo frequently makes cash available within 30 minutes of approval.
Cigno offers up to $1000 in short-term cash loans through a large network of direct payday lenders.
Cigno Loans has the following features:
- A high approval rate – all applications are evaluated, even those from jobless persons, low-income people, and the elderly.
- A 24-hour online platform that allows you to apply whenever and wherever you want.
- A simple and speedy application procedure.
Some loans allow you to receive cash within hours. The cost of your loan depends on the loan term, level of income, and your profile.
Fundo is an Australian-owned short-term lending business that offers loans ranging from $300 to $2000.
Unlike other traditional lenders, Fundo does not automatically presume that a borrower with a less-than-ideal credit rating is a high-risk borrower. Before making a judgement, they consider your particular circumstances to determine your capacity to repay a loan. Approved borrowers frequently receive their cash the same day.
The Bottom Line
Taking out short-term loans is beneficial, especially for small businesses that need extra financing. There are many loan companies out there that offer several types of financing, so it’s important to not rush into a decision. Take the time to research a few and compare their loan offerings before committing. A shorter repayment period will generally mean a higher interest rate. It should be viewed as a bonus since you will not be tied to paying back the loan amount for a longer period of time. But it is also important to look at any fees that come with going through them to make sure it fits your budget.
Marjorie Hajim is the SEO Manager for Friendly Finance. Friendly Finance is a leading loan matching service in Australia specialising in consumer finance. She loves growing businesses with a focus on their online presence and is passionate about organic growth and all things digital. She has written articles for Coinpedia, SavedbytheCents, The Next Tech, & many more!