About Short-Term Personal Loans

Short-term personal loans can put instant cash in your pocket. These loans are useful during emergencies, and most people apply for such loans to pay for auto repair, personal bills or other unexpected expense. Unfortunately, short-term personal loans are normally due within 14 days, which does not give borrowers much time to come up with the cash. Before applying for a short-term loan, applicants need to take several factors into account and consider whether they can afford a quick cash loan.

Function

Short-term personal loans or cash advance loans serve a useful function. They basically provide consumers with instant access to quick cash. Unexpected expenses can occur at the most inopportune times. You can apply for a standard loan at a credit union or bank. However, these financial institutions have specific loan requirements, and they require a good credit history and collateral. And even if you are approved for a loan, it can take up to two days to receive the cash.

Types

There are two types of short-term personal loans. Borrowers can apply for a standard 2-week loan, in which repayment is due by their next pay period. However, short-term cash advance lenders also feature a 30-day short-term loan. This is ideal for applicants who need a longer payment term. Needless to say, a longer payment term involves additional finance fees, and borrowers pay more for the loan. To keep fees low, it is wise to select a 14-day loan term.

Benefits

Short-term personal loans benefit borrowers and lenders. These loans feature high interest rates, which allow lenders to make a substantial amount of money in a short amount of time. On the other hand, these loans benefit borrowers because they are able to qualify for a cash loan despite bad credit, no credit history and no collateral. Borrowers can visit a local store or submit an online application. Upon approval, the lender deposits the loan into a bank account. The money is available by the next business day.

Misconceptions

Not everyone qualifies for a short-term personal loan. Although the loan requirements are simple, cash advance lenders have to adhere to basic loan guidelines. To qualify for a short-term personal loan, borrowers must be in a position to repay the loan. Thus, cash advance lenders require a minimum monthly income, which is usually between $1,000 and $1,500. And because funds are typically direct deposited, an active checking or savings account is necessary.

Warning

A few cash advance or short-term personal loan lenders take advantage of borrowers. They charge excessive rates, charge upfront fees and they do not fully disclose the loan terms. It is difficult to pinpoint a dishonest lender. However, borrowers can protect themselves by comparing different short-term personal loans. Ask questions, read the loan application thoroughly, and choose a lender that offers the lowest finance rate. The typical short-term loan fee is between $10 and $30 for every $100.