Short term loans bad credit

Short Term Loans are now a trend in the financial world. There are numerous individuals who are looking at short term loans as a means to overcome the financial adversities they are in. Looking into the current financial conditions short term loan has taken the lead on other form of loans. Short term loans users are from the group of people who find it extremely difficult to fetch a long term loan. There is an entire class of society that does not have a viable source for small loan amounts and Short term loans have easily bridged the gap and provided option to this class to avail loans.

Short term Loans are cash advances that are made available to people in financial hardship. The range of the loan may vary from lender to lender. The cash can be used for different emergency purposes such as medical emergency or an important trip.

Types of Short Term Loans:

There are different types of short term loans that a borrower can look for in the market. It is the responsibility of the borrower to choose the best one that caters to his financial demands.

a)      Bridging Short Term Loans: Bridging Loans are used usually to serve as a funding for the purchasing or the refinancing of a property asset, where the property has been purchased at discount and there is urgent need to settle the value/mortgage can be decided.

b)      Unregulated Short Term Loans: These category of short term loans are those that are offered through security against residential properties and commercial properties or properties which serve both purposes.

c)       No-credit check Loans:  There are large number of people who are affected by bad credit history.  Short term loans are a viable option for them as they have the option to provide a guarantor who takes responsibility of repaying the loan if the actual loan holder fails to make payment.

Before we learn about short term loans bad credit we need to know what bad credit refers to.

Bad credit refers to the credit history of a person who has not been able to make repayments of his previous credits in a timely manner. This may be due to late payment of previous loans taken for both long and short term periods. It is not mandatory that a person may have a bad credit history due to unpaid or lately paid loans; bad credit history may be due to late payment of electricity bills, telephone bills, and internet and cable bills. If an individual’s car or any other luxury product was repossessed by a company then the credit history is impacted adversely.

People with bad credit history find it very difficult to arrange a loan from a bank or credit union as the assessment process is stringent and often their loan application gets rejected for a bad credit history. Thus in such conditions short term loans came out to be the most suitable option for them and worked as an alternative credit source.

Advantages:

1)      Short term loans bad credit involves unbiased and easy assessment of the borrower’s financial conditions by the loan provider. This helps to get approval of loans faster and hassle free. This is in contrast to the rigid process followed by banks.

2)      The entire loan process including application, approval and transfer of money is simple for the borrowers’ better understanding. The borrowers get a good experience as they go through an easy procedure.

3)      The short term loans bad credit lenders being responsible loan providers ensure that they contribute towards improvement of the customer’s credit history. They offer financial education and guide their customers to plan their repayments and also future fund management.

4)      Timely repayment of short term loans bad credits also helps to improve the credit history. The short term loan lenders have connection with many banks and share the borrower’s timely payment information with credit agencies and also with the banks and credit unions with which the borrower had financial transaction in the past. As the positive information of repayment spreads it helps to improve the credit scores.

5)      It has also been observed that short term loans bad credit has been of immense help to those who want to be independent and do not feel comfortable discussing about their unsatisfactory credit history with banks, insurance companies. There are individuals who are reluctant to take help from friends and family members in financial matters and want to resolve their financial problems themselves. Short term loans for bad credit by different lenders have emerged to be a popular option for this group of people.

Disadvantages:

Although short term loans bad credit has come up as a popular source of cash flow for an entire group in the society, it has its disadvantages.

1)      Many people have reported that they have been cheated by frauds in the market. Customers looking for short term loans search through various websites that provide these loans but lend up victims of fraudulent activities.

2)      The cycle of debt is probably one of the reasons why one might be discouraged to get short term loan as it can result in a series of debts that can unmanageable by the borrower. It is necessary that a borrower understands how one loan can lead to another loan.

3)      There have been reports by short term loan users that their bank information has been accessed by unknown companies who have debited all their money. Threating calls have also been received by certain loan users even after paying off the loans and interest.

Short term loans bad credit are helpful to those who are in need of money and their current financial conditions are satisfactory although have a bad credit history. One needs to carefully analyse his financial circumstances before deciding to take short term loans. As delay in repayment can cause further financial hazards for the borrower, making the financial situation worse than the original situation when the loan was taken.