What are the Pros and Cons of Short-Term Personal Loans?

Sometimes no matter how much we plan and prepare, some emergencies can catch us off-guard, but short-term personal loans can often save the day. While they certainly aren’t a cure-all, and they should be used wisely, short-term personal loans do have some benefits.

Pros & Cons Of Short-Term Personal Loans

Pros

They Are Highly Regulated At The State Level

If you work with a reputable lender in your state, the lender will be required to adhere to local laws and regulations that govern short-term personal loans. This means that they will be required to check your income to make sure you can afford the loan and they will also be required to give you full disclosure of all fees, charges, and rates associated with your loan. Many states also require the lender allows the borrower extra time to repay if they are having problems.

They Are Fast

One of the biggest benefits of short-term loans is that they can be issued incredibly fast. If you apply in-store, you will often know within minutes whether you are approved or not, as well as for how much. For online applications, you should know within an hour depending on the verification and approval process. In either case, you can generally get cash in hand that same day, making them perfect for cash emergencies.

They Are Easy

The application process is usually extremely simple. You’ll need to provide the lender with some basic personal information, as you would in any lending situation. You will also need to provide evidence of your current employment status, income and proof that you have an active checking account in good standing.

There Are Multiple Options

Depending on the state laws where you live, there are often several options for short-term lending. You may be able to obtain payday loans, installment loans, vehicle title loans, or even pawn loans. These options give varying timeframes for repayment, as well as different requirements for collateral, but they can all get you the cash you need quickly.

You Don’t Need Perfect Credit

Short-term loans are considered one of the best options for consumers that have damaged credit or limited credit history. This is because the loans are generally smaller, and the interest rates higher, which offsets much of the risk associated with lending to less creditworthy consumers.

Cons

Short Repayment Period

When taking out a short-term loan, the interest rates will be capped by your state laws, but you will be required to make repayment relatively quickly. Most short-term loans need to be repaid within 30 days unless it’s an installment loan.

The Interest Rates Aren’t The Best

While the interest rates can be manageable, they certainly aren’t low. Since many short-term loans are unsecured, the lender has more risk. Most lenders will mitigate this risk by charging higher interest rates. Even when the APR is legally required to be displayed, it may not have much meaning in the context of a 30-day loan. The Total Amount Repayable will be a more accurate indication of the true cost of the loan.

For The Best Short-Term Personal Loans

If times have gotten tough and your budget is near its breaking point, some fast cash may be just what you need. Reach out today to discuss your options for getting a short-term personal loan.