6 Month Loans

There are different types of loans coming out in the market today and with time; people have realized that there is a need to bring the borrower closer to the lender. This can only be done if the nature of the loans becomes more friendly and beneficial to the consumer, so that it is not as heavy on his pocket. Payday loans and other short term loans, although beneficial to the customer because they are catering to people who cannot afford other forms of credit, have turned out to be more of a disaster than a service. Therefore, there is a need to introduce other types of loans so that people have more options to choose from and there is more emphasis on reducing the debt cycle rather than contributing to it.

6 month loans or short term loans can offer that advantage as the main problem with payday loans was the short duration of time that was offered to borrowers, to repay the loan. As a result of this, a majority of the borrowers were rolling over their loans which chewed a sizable chunk out of their disposable income. 6 month loans or short term loans give the option of equal repayments over the duration of 6 months which puts the borrower at financial ease.

There are certain benefits that these types of loans carry and it is important to fully understand the scope of these loans.

       Accessibility: A lot of borrowers have claimed that payday loans are easily accessible and that is one of the main reasons why they are so popular. Therefore, short term loans serve as a complete alternative as they supply loans in an as easily accessible manner as payday loans and require simple documentation to be completed before you are eligible for the loan.

     Lower Interest Rates: The interest rates that come with these loans are usually much lower than payday loans and therefore do not put financial pressure on the borrower, as in the case of payday loans where the 2 week deadline can sometimes become disastrous.

    Fixed V/S Variable Interest Rates: These short term loans usually have a fixed interest rate as compared to other types of loans, where the market rate determines the rates charged by the lenders. As a result of this, you will continue to pay the loan amount with the same amount of interest charge irrespective of the market rate, which can sometimes turn out to be a blessing.

     Less Financial Burden: One of the greatest concerns with payday loans is their default charges on non-repayment of the loan. Studies have found that a majority of the borrowers end up in debt because of the default charges and their inability to pay off the entire amount of the loan, including the default fees and the exorbitantly high interest charges. With short term loans, since they are spread out over a period of 6 months, they usually don’t require you to shell out a very large amount every month and in the case of installment loans, the amount you will pay every month doesn’t usually change.

Considering borrower’s feedback, payday loans have also come up with 6 month loans and they are turning out to be far more popular than payday loans. These types of loans also face less regulation and it is always easier to reach out to customers where the risks are lesser and it creates a positive impact on the borrower. There are many borrowers who have exhausted the various options available to take credit and there are some who don’t wish to get into this because of their disastrous credit histories and there are some who are status conscious and don’t wish to embarrass themselves. 6 month loans cater to a holistic demographic, people who have a stable income as well as people who find themselves in financial emergencies. Since the interest rates are low on this one, the customers don’t face harassment calls at the end of their month, as long as they pay off their dues within the stipulated period of time. These types of loans don’t require a guarantor to stand against your loan and in this sense; they work pretty much like the payday loans. In short, they have all the advantages of payday loans and conventional loans and have blended into a different category serving all kinds of people.

There are several financial institutions offering these kinds of loans and it is not necessary to go to a payday lender only to benefit from these services. There are several alternative institutions also dealing with these kinds of loans and it is important to do a complete research on these institutions before jumping into anything. The uncertainty of payday loans has given rise to credit unions which are dealing with several types of loans and have proven to be a lot more credible than payday loans. This is because they offer loans at a much lower interest rate, their default charges are either very low or absent and their repayment methods are known to be customer-friendly.

There are several other lines of credit such as non-profit organizations which are usually formed within a community by 2 or 3 people who are known to each other, and as a result of that, there is no scope for any kind of fraudulent practices. These are not for profit and because of that, their main goal is to reduce the debt trap that most borrowers get into and at the same time, educate the borrower on the implications of various types of loans so that they are informed when applying for a loan. Their responsibility extends to an advisory role in addition to just lending; as they want to ensure that the population that is currently facing financial crisis becomes a lot more responsible towards their financial needs and understands the disadvantages of opting for services such as payday loans.

All in all, 6 month loans can be a blessing.