Short-term Loans: In Brief

Short-term loans are very popular in the United Kingdom. It offers a simple, short, and convenient way to cover a gap in personal budgets. Either you are going through a tough month to meet the ends or if you are facing unexpected expenses, whatever the reason may be short-term loans help to bridge the gap.

No matter what their shape or size, the fact that all short-term loans come with short repayment terms definitely has some repercussions. The consequence of borrowing a short-term loan depends on your behaviour displayed after borrowing it. Regular repayments will yield in positive results while non-repayments or missed repayments can affect your credit score. Hence, borrowing a loan responsibly can help in a fruitful consequence.

Now, let us understand in brief about the advantages of the loan:

Unsecured Loan

Short-term loans are unsecured loan because they are for smaller sums and borrowed without keeping any asset as a collateral.You can borrow a loan without putting your valuables at stake. Please repay the loan regularly to maintain your credit score. A good credit score always help you to borrow a loan next time, if you are in need, without any hassles.

EasilyApplication Process

The process of application involved while borrowing a short-term loan is easy, simple, and less time-consuming as compared to the long-term or secured loans. Borrowers can also apply online for a short-term unsecured loan, at the comfort of your own home. One of the defining features of a short-term loan is that it is easily available. One can avail short-term loan within a few hours or in a span of a day, depending on lenders.

Unrestricted Usage

Short-term loans can be availed for any of your requirements. You may avail a short-term loan and put it to any good use. The loan doesn’t restrict you to use it for limited areas of monetary concern. You can put a short-term loan to multiple usage such as for repaying your pending bills, repairing your boiler in the middle of a payday, etc.,

Short-term loans definitely come with their own advantages that help the borrowers to apply for it. However, there are some disadvantages to it, and they are:

High Cost Short-term

This loan comes under the category of High Cost Short-term loans that means it is available for a period of less than a year. And, the interest rate of the loan borrowed may be higher. Hence, you should always look for alternatives while borrowing a loan, if you are not sure about the repayment affordability.

Small Amount can be Borrowed

An unsecured short-term loan can offer a small amount of money to be borrowed. As the maximum length for this type of loans is 12 months, it cannot be borrowed for a time frame longer than a year. If an individual seeking for a loan needs it for more than 1 year, they should explore other methods of borrowing such as a long-term loan or a secured one.

Everything has their own set of pros and cons. However, if handled appropriately with a responsibility, then you may opt for this loan option. And then there may be people who will be searching for Short-term Loans for Poor Credit. Many people also search for “Short-term Loans for Bad Credit UK”. For people, who have a bad credit score, it gets difficult to avail a loan. Because their credit score makes them a less preferable borrower for the lenders.

Three major companies in the UK assess the credit scores based upon the financial behaviour of an individual. That means how good are you in paying your bills and debts and how regularly you pay them. These three companies that produce reports are Equifax, Experian and TransUnion (formerly Call Credit). Each of these three companies makes their own credit reports and they have different ways of “scoring” a profile. For instance, Equifax rates people from 280 to 850, Experian from 330 to 830 and TransUnion rates out of 1000. Your credit score is updated every month by each of these credit companies. Keeping your credit score in balance will help you to keep your credit rating high. Once it starts falling, you have to tight up a bit to repay it as a bad credit score doesn’t repair overnight. Thus, be punctual and make your repayments on time and in full.

WARNING: Late repayment can cause you serious money problems. For more information, go to MONEYADVICESERVICE.ORG.UK.