When it comes to short-term loans, there’s a lot to learn about them, especially when it comes to paying them back. Here’s what you need to know about a short-term loan, how to pay them back, and how these loans can affect you as a borrower.
Short term loans are financing options that typically allow borrowers to receive funds without undergoing a traditional credit check. These loans make it possible to receive funds very quickly without having to jump through the same hurdles that you would have to overcome to qualify for a bank loan.
Many people turn to this type of financing when a bank loan isn’t an option or when there’s an emergency that requires cash in a short period of time.
There are several different kinds of short-term loans available. Title loans offer quick access to cash in exchange for a clear title to a vehicle to use as collateral. Pawn loans work similarly to title loans but the collateral changes to household valuables (jewelry, electronics, guns, tools) in exchange for a cash loan.
Payday loans are another kind of short-term loan in which the borrower agrees to have the lender collect the sum of the loan plus interest directly from their bank account. The borrower is basically receiving an advance using their next paycheck to pay back the loan plus interest.
If you received a loan from a storefront, the lender would require cash, check or debit card payment in the store when the loan is due. If you used collateral to secure your loan, the collateral would then be returned upon your payment in full.
If your loan was originated with an online lender, the payment would simply be debited from your checking account on your next payday. This way, everything can be done online without ever having to leave your home or office.
Short-term loans usually aren’t going to be anybody’s first choice when it comes to financing, but they are a very reliable source when the need arises. Most people seeking short-term loans do not have the time or credit rating to access traditional loans from a bank or credit union.
This makes short-term loans an important addition to the landscape of credit products as there are millions of individuals that desire access to convenient, reliable and transparent options that meet their short-term cash needs.
While they do carry a higher interest rate than a traditional loan, there are many state-licensed lenders which can provide safe and legal financing. Most state laws also provide consumer protections which limit the rate and the number of loans a borrower can obtain. This helps safeguard the consumer from overusing or overpaying when using short-term loans.
If you are looking for a short term loan, Lending Bear can help! Simply visit your nearest Lending Bear branch or apply online today to speak with one of our friendly and professional team members.