What Is a Short Term Loan?
Short term loans are unsecured loans which allow you to borrow small amounts of money over a relatively short period of time with a very high interest rate. They are easy to access and quick to be approved.
In many ways, they are similar to payday loans. However, they can be taken out over a longer term. A typical payday loan might be for a total of £250, which you will pay back on your next payday. A short term loan, however, might be for £800 and you can borrow it for a year or even more.
What Are the Advantages of a Short Term Loan?
You should avoid short term whenever possible, but clearly people continue to take them out so there must be a reason for it. Here are the advantages of a short term loan:
- You can apply and be approved for a short term loan very quickly. In emergency situations, the quick turnaround of the whole process can be very tempting.
- There are not really any credit checks throughout the application process. This means that even with bad credit it is likely that you will be granted a loan regardless.
What Are the Disadvantages of a Short Term Loan?
Short term loans are an expensive and dangerous method of borrowing. A list of the disadvantages is listed here:
- Because they are unsecured, short term loans carry extortionate interest rates. You can very quickly end up paying double what you originally owed after borrowing money for around a year.
- If you fall behind and the debt starts to rise, it can be tempting to take out another loan. This can create a vicious cycle which eventually runs your financial situation into the ground.
What Happens If I Am in Short Term Loan Arrears?
The repercussions for falling behind on payments are largely the same as any other form of non-governmental unsecured debt. You will receive a letter informing you of the situation, and it will encourage you to pay back what you owe. If you cannot address the issue, they will continue to harass you.
If the issue goes on long enough, the company you borrowed from will pass the debt on to a debt collection agency who specialise in making your life incredibly uncomfortable. Alternatively, they may take you to court to demand the money.
Without intervention, you may be forced to take involuntary bankruptcy and lose control of your most important assets.
What Should I Do If I Can’t Pay Short Term Loan Repayments?
When you fall behind on financial commitments, and debt starts to dominate your life increasingly, it is time to get help. There are countless ways in which you can address unmanageable debt and very quickly gain significant relief -which makes it all the more frustrating that thousands of people around the country continue to live with the stress instead of doing something about it!
Dealing with finance is complicated, that is why you should let our team of experts do it for you instead. You will not have to lift a finger, and in the process of getting rid of your debt you can wipe up to 80% off without paying a penny of it.
Give us a call on 0800 808 5124 and make the calls and demanding letters stop today.