Short Term Loans

Before you apply for a short term loan, make sure you understand what you are getting yourself into for both the short term and long term. Payday short term loans are expensive and are only a means if you are in a financial situation with serious problems. The interest to short term loans are extremely high, and this is what will get you into trouble in the future when you are paying back your loan. Below are just a few reasons why you should avoid short term loans if you can.

High Interest

When you apply for a short term loan, you are probably thinking of the immediate good of being able to use that money for whatever need you have. Unfortunately, you are most likely not thinking about how when you pay it back it will be around twice as high than what you borrowed. Each company will have slightly different Representative APRs. This number is important but not everything. The higher this is means the higher interest they will charge. You should look for a company that has a low APR. However, there are many other factors to take into consideration.

Hidden Fees

Many companies will offer hidden fees. Even though this is not a responsible lender, companies will still do it. You want to make sure the company you choose does not charge a fee or at least is clear about what fee they charge in their application, late fees, and if you decide to pay early. Responsible lenders will tell you exactly how much you owe and when you owe it. There are companies out there that are willing to help you get to a stable financial status, and you want to make sure you are working with one that will.

Instant Money

Short-term loan companies often boast about how fast you will be able to get the money after applying for the loan. Though this may seem like a beautiful thing at the moment, you must realize this is a tactic to keep you in debt. The faster you get the money the more likely you will want to re-borrow money whenever you are even in a bit of a financial crisis. This does not build up training to help you budget or save for an emergency fund if you always have a way out. Some companies will offer money the day of the application but allow for a particular time where you can return the loan without having to pay any fees. Even this is better than nothing because the cooling off period will allow you to rethink and see if you truly need this loan or if you can find another source for the money with lower interest.

If you are highly considering a short term loan, try and think of an alternative solution. Perhaps you can put the money on a credit card, or borrow from a family member. Remember that the key issue is the high interest and if you can avoid that you are at a better state financially.