Are you considering an instant cash advance to help make ends meet till payday? Looking for a short-term loan to help with an unexpected expense? If so, don’t make that move until you read this article!
*Post may contain affiliate links. Full disclosure can be viewed here.
How to Cope with Debt When You Lose Your Job
13 Inflation Hacks to Protect Your Financial Life in an Economic Downturn
What is a Short Term Loan?
According to the Corporate Finance Institute, “A short term loan is a type of loan that is obtained to support a temporary personal or business capital need.”
As you probably could’ve guessed, these loans are typically paid off within a short time span — usually six to twelve months.
Common short term loans are cash advances or payday loans (which are usually pretty easy to obtain). With a payday loan, you can expect to have the full amount plus interest withdrawn from your account on payday. A cash advance can be done through your credit card company or through a lender online. A cash advance can be instant or can be deposited in as little as 24 hours in many cases.
You can also apply for a short term installment loan online through a variety of lenders and be approved within minutes! As time goes on, it seems to become easier and easier to take advantage of short term loans. There’s even a growing number of options for those looking for a short term loan for individuals with bad credit.
But is a short term loan the best option for you?
- Short term loans are usually pretty easy to acquire as the application process can be pretty simple and generally come with less requirements for approval.
- Payouts for short term loans can be pretty quick — often showing up in your bank account within 24 hours.
- The whole process can usually be completed online saving you both time and energy.
- Great for small financial emergencies or unexpected expenses needing a quick remedy
- You will likely end up spending less out in interest than you would for a longer-term loan due to the shorter borrowing period.
- Low risk
- Short term loans are usually for smaller amounts (although this could also be an advantage as it means you will have less to pay back).
- You have a smaller window of time available to pay the borrowed money back.
- Interest rates can sometimes make the small amount borrowed (or approved for) not really worth it.
- Failing to pay back the loan in time can lead to an even bigger financial mess.
Are You a Good Candidate for a Short Term Loan?
Now that you know what a short term loan is and both the advantages and disadvantages of this type of loan, the next question is are you a good candidate for this short term financial solution? Well, this depends on a few things.
Consider asking yourself the following questions to help you determine whether or not you should start that short term loan online application.
- Do you have a regular income? (If yes, a short term loan may be a good option in an emergency.)
- Will repayments work within your current budget? (If yes, a short term loan is definitely a good option in an emergency.)
- Are there other ways you can quickly come up with the money while avoiding interest, credit checks, or excessive fees? (If no, and you answered YES to the first two questions, then you should probably just go ahead and apply).
There are, of course, other things to consider such as your credit score, current debt, upcoming holidays, vacations, etc. I could go on forever on this subject, but I want to keep it brief so you can quickly decide your next step.
If you are struggling to make your paychecks stretch or to overcome debt, I highly suggest checking out How to Make $100 a Day and my guide to cutting down excessive expenses. If you’re battling medical debt, consider checking out this guide.
Wishing you all the best on your journey to financial wholeness!