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Short Term Loans: What Works and What Doesn’t? A Complete Beginners Guide

Although we try to save and meet our expenses week to week, for a variety of reasons there are times when this is not possible. When this happens it may be necessary to take out a short term loan to cover the shortfall you may be experiencing, breaking these expenses into smaller repayments that can be managed over time, reducing the pressure on your cash flow. Although short term loans can sometimes get a bad rap, knowing how to choose the right loan and the right company, and planning long term to pay the loan back, is an important part of making the right decision. Here we look at a guide of how to choose the right loan for you, and what the process of choosing that loan should be.

When to take out a loan

You may find it necessary to take out a short term cash loan when you are facing unexpected expenses that you can’t afford as part of your normal budget. This could include an unexpected purchase, an unexpected bill, an emergency such as a repair, or a fine. It should be an expense that you are able to pay off within 16-60 days, as short term loans are usually only for this period.

Choosing the right company

Look for the right loan company for you by doing some research on companies that have good customer service and reviews. Check the company website to see if they are a reputable provider. The website should be professional and include customer testimonials and information about how long they have been in business and the way they conduct their business. Honest, trustworthy and reliable lenders are best.

Your lending company should also have a visible presence on social media, as this is an establisher of trust. Social media sites and consumer complaints or review sites can also give a good indication of how their customers feel about them.

Making your decision

Once you’ve made the decision about which company to go with, as well as exactly how much money you need to borrow, find out about other aspects of the loans such as the terms and the interest rates. It’s important to know all the details so that you don’t get locked into a situation that is negative for you in the long term.

Work out how to pay it back

Preferably, once you have all the information you need, you have to work out how you will pay your loan back, even before you take out the loan. Once you are approved, you can have access to the money, but that doesn’t mean you shouldn’t pay attention to how you are going to pay it back. Do your budgeting on paper, so you know exactly how much you expect to earn and how much you will save and put towards paying the loan back. Make sure you stick to this budget and avoid all unnecessary costs and expenses while you are in the process of paying the loan back.

Try to pay the full loan amount back on the due date. If you are unable to do this, pay as much as you can, to avoid any additional interest & fees. Request a paid in full letter after you have paid off your loan, and keep an eye on your bank account at all times to check on the progress of your finances.

Being money smart

Managing your finances means avoiding situations where you may have to take out a loan for emergency cash. Try to save a small portion of your income each week to put into a savings account for emergencies. If you need to take a loan, only take out what you can afford to repay and always read terms and conditions and fine print disclosures. Communicate and research the service provider for the best outcome for your loan and to understand the whole process.

It is possible to make good decisions in relation to taking out a short term loan, provided that you take the time to do the right research and calculations in order to make the right financial decisions for you.