The Importance Of Learning About Short Term Financing
We don’t really have control over urgencies in life and very rarely can we say that we’re well equipped to handle urgencies with ease. However, payday loans today are one of the major ways in which borrowers tend to fulfill urgent financial requirements in various ways. Now, some sources would suggest that you have various alternatives to these loans when it comes to availing financial aid to tide over temporary financial issues with ease. We will come across these alternatives as we progress further through the post. But the reason why alternatives are constantly suggested is because short term loans generally carry very high rates of interest. It might prove a bit difficult to avoid a debt trap if the borrower is not serious about repaying his debts. Here are certain features of these short term loans:
They are primarily availed when borrowers need fast cash to pay off a hospital bill or else a college examination fee or any other urgent fee.
Most of the lenders conduct business online. The applicant can provide his details online for approval. If approved, the creditor deposits the money to the borrower’s account within 24-48 hours of approval. It implies that they are arranged much faster their traditional counterparts.
The Annual Percentage Rate might touch 400 percent a year.
They can generally be borrowed for a period of 15-90 days.
They can be borrowed even without very good credit scores as means to back your credentials.
Why Are Alternatives Often Suggested Before Availing Short Term Financing?
Now, the high rate of interest attached to these loans often makes it very difficult for borrowers to repay on time. The total number of outstanding payday loans is growing by leaps and bounds every day and this primarily is triggered by indiscriminate lending. Lenders, driven by the greed to earn high interest on loans are not estimating the repayment capacity of borrowers before providing the short term loans. Please remember that if you have defaulted the first time you would be given an option of a rollover. But that would mean double the (already high) rates of interest with consecutive failures you would be staring at an imminent debt trap. This is the reason why a potential borrower is suggested to consider all the other options before availing the aid of short term financing.
Traditional loans with modest rates of interest are the best (and cheaper) alternatives to short term financing. It’s understandable that they can’t be arranged as fast, owing to the lengthy credit check involved. But please at least consider its availability before giving up all hopes. Talk to your bank, if they can arrange for something quick to bail you out of trouble.
Cash advance loans are mostly availed when borrowers find themselves cash strapped with their payday still a few days ahead. In that case, consult your employer about the possibility of an advance.
Peer to peer lending, asking for personal help from friends are some of the other alternatives that can be considered as well.
In short, short term financing should be considered as the last resource after all your other sources are exhausted.
Author Bio: Sam Payn is a regular industry blogger with due expertise in finance, web technologies and travel.