When to Take Short Term Loans?
October 3, 2020
Usually, short-term loans are designed to meet your urgent need of cash. If you want to build your house, or if you want to buy your car in such situation, applying for short-term loan makes no sense.
However, imagine a situation – you suddenly met with car accident and need urgent cash for repairing your car, or say you have to pay an urgent bill, but you have no money left in your bank account. These are the conditions when applying for Short Term and Payday Loans will be more appropriate.
You can approach Loan Pig for any short term loans that can make you available urgently needed cash at best terms.
Let us now discuss under what situation applying for short term loan will make real sense. Before that, let us try to understand what these short-term loans are?
You will consider any loan as short term loan, if it is to be paid back within 3 to 12 months. Any loan whose repayment period exceeds 12 months will normally be considered as long-term borrowing. All short-term borrowing cannot be considered same like payday loan. Payday loan is also a short-term loan, but it is fully repayable after a month of borrowing.
Following are few situations when it is better to go for short-term loans.
- Paying your urgent bills
You may not have sufficient fund to pay your utility or any other urgent bill within the due date, failing which you may have to pay a hefty amount of fine. In such situation short term borrowing make sense.
- Covering checks
You must have issued a check and after that you realized that there is insufficient balance left in your bank account. Nowadays while electronic clearing of any check if insufficient fund is found, then check will bounce with hefty amount of penalty.
In such situation, you must go for short-term loan.
- Unexpected expenses
This kind of situation has been faced by many of us, when either your car suddenly breaks down or you have to take your child to doctor immediately and things like that. If you have insufficient fund to meet the expense then go for short term loan.
- Your need is small money
Short term loans usually are not meant for large sum of money, as they attract higher interest rate and hence borrowing large money does not make sense.
- Your money is urgent
Short term loans will be more applicable for any urgent need of cash that you cannot meet either through borrowing from your friends or from your bank. However, if you fail to arrange this money in time then you may incur a greater loss.
- You are sure about repaying back
Make sure that while you borrow short term money, then it should be a small amount of money, which you can easily return back within short period of time. Since, these loans attract higher rate of interest and by delaying repayment your liability can increase.
- When no other options available
Usually, people go for short term loan when no other options are available to them.