When you need to borrow some money, you should explore the different types of borrowing available to you. A short term loan is one of the options you might consider if you want to borrow a smaller amount of money. Some of the reasons they might appeal to you include that you can receive one quickly and pay it back quickly too. You have probably noticed that short term loans seem to come from specialist short term lenders or lenders that provide a range of products. However, you may wonder whether it’s possible to get a short term loan from a bank, as perhaps you feel that a bank loan could be a more reliable choice.
If you look at your own bank, as well as a few others, you’ll soon discover that they don’t offer short term loans. While they do offer loans, they are usually for amounts of £1,000 or more, with repayment terms of at least a year. If you want a short term borrowing option with your bank, your best bet is to choose an overdraft. You might have an approved overdraft, which you can use when you want without penalties. You can also withdraw money so your account goes into the negatives, even if you don’t have permission. However, this can sometimes come with heavy fees.
Banks prefer to focus on some other lending products, including credit cards, overdrafts and long term loans. If you have a credit card from your bank account, you can use it to borrow regularly, and not just as a one-off. Plus, you can make regular monthly payments towards your debt. And bank loans can help you borrow larger amounts for expenses such as home improvements. Banks don’t offer short term loans as such, but they do offer other lending options that can be regarded as short term.
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Short Term Loan or Bank Loan?
Since you can’t get a short term loan from your bank, there are times when you need to consider what type of lending is best for you. Should you go to a bank for a larger loan that will take you longer to pay off? Or, perhaps you should use a product like a credit card or a bank overdraft on your account? Or should you take out a loan with a payday lending company? This will be a smaller amount that you can pay off more quickly? There are advantages and disadvantages to different types of lending. Exploring them will help you decide which is the best option for you.
A Bank Loan
If you’re considering a bank loan, you might have a bank you already trust, or you could compare loans from various banks to find the best deal. There are some excellent reasons to choose a bank loan, and some situations when it’s the ideal choice. One thing to think about first is how much money you want to borrow. If you want to borrow a larger amount of money, a bank loan is likely to be your best choice. Bank loans often start from around £1,000 or possibly a bit more. They can go up to several thousand pounds; for example, at Barclays, people tend to borrow up to £25,000, but they do allow people to borrow more.
Another advantage to taking out a bank loan is that it helps you spread the cost of what you spend it on. The repayment term is usually at least a year on a bank loan, so you don’t have to pay back your money right away. You can look at different products and choose a loan that suits you, with the right repayment term and the best interest rate.
You can find loans that allow you to spend the money on whatever you want. Some people use bank loans to consolidate existing debts so that they can turn their other debts into one easy payment.
There are also some disadvantages to bank loans which could make them unsuitable for you. Sometimes, obtaining a bank loan can be difficult. If your credit score isn’t particularly strong, it can be hard to secure a loan from a bank.
Although some bank loans can be used for anything you want, some banks do put restrictions on how you can use a loan. This is something to be aware of if you’re borrowing money for a specific purpose. For example, if you take out a personal loan, you might not be able to use it to set up a business, buy property or make any investments. This can limit you in how you spend your money, although you can often look for other types of loan to do some of these things.
You should also consider that sometimes looking for a bank loan can affect your credit score. This only happens with some lenders though, so you should ask before you get a price quote from a bank. Like any loan, you can be charged a fee if you miss your payments. You might also have to pay a fee if you want to pay back your loan earlier than scheduled.
Short Term Loans
Short term loans offer their own advantages for people who want to borrow money. You can have a large choice of lenders to consider, and you can often borrow up to a couple of thousand pounds. So there might be times when the amount you want to borrow could be suitable for either a bank loan or a short term loan.
When you borrow from a short term lender, you can usually use the money for anything you want. What’s more, you don’t have to pay it back over such a long period. Most payday loans have a length of 30 to 60 days, and many lenders also offer loan periods of up to six months.
A short term loan can be a good choice if your credit score isn’t good enough for a bank loan. You may be inclined towards a no credit check loan, but be aware that by law, lenders are obligated to check your credit history, However, lenders aren’t always as strict. Some people are a little wary of short term loans, but their regulation has been improved in the last few years. Lenders are now much more responsible than they were before. There are limits on how much you can pay back, for example.
Short term loans are often much faster to get than other types of credit. You can secure a loan within the day, and sometimes in just a few hours.
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They tend to be fast and flexible, so you can easily borrow the amount you need and set the repayment terms. Online loans are usually much faster and easier to obtain than bank loans. There are very clear rules about how much short term lenders can charge in late fees and other costs too.
There are also some disadvantages to short term loans. You can’t borrow as much with a pay day loan, so they’re not ideal for larger projects. And if you would rather spread out payments over a longer period, they’re not the right choice for you. A short term loan is also only an option if you know you can pay it back when you need to. You could end up paying back up to twice the amount you borrowed, so it’s important to know that you can manage it.
Compared to a regular loan from a bank, you could end up paying back more with a short term loan. However, it can be worth it if you want to have quick access to the money you need and you don’t want the debt hanging over you.