What Are Short Term Loans?

Loans (Photo credit: jferzoco)

Hasn't it happened to all of us, where something has gone wrong like a medical need or a unexpected car repair and we need some cash. In times like this we wished we would have put a little money aside. But according to Consumers Credit Association more than 70 percent of Americans have no savings or way to get some fast cash for an emergency.

The typical short term need is generally between $100 and $1500. But usually the first emergency need is between $300 - $500. The problem with an emergency is you don't have the time to use the regular channels associated with borrowing, be they credit card cash advances or your local banks loan department.

The choice left to you is to try to get a short term loan which is either a payday loan or an installment loan. The time frame for paying back the loan is between 2 to 4 weeks. With it usually being 2 weeks. Because of the convenience and quickness of the loan process be prepared to pay a higher rate of interest. Also be very sure you are going to have the money to pay back these fast cash loans.

Applying for the loan consists of providing basic information. You will then be explained all the fees and what dates the money is to be repaid. Also expect a fee charged by the loan office on top of interest payments. This type of loan is more expensive to the consumer because the lender does not do a credit check and you do not have to provide collateral. The lender bases the loan on the amount the borrower makes at their job.

As with all financial decisions it is important that you understand the seriousness of using these services. Short term loans can help borrowers handle emergencies when caught short of cash but they are not to be used as a way of life. Prepare for the next emergency soon by starting to save some money each week.