Emergency Funds

Short Term Loan: Is it the Best Solution in a Money Crisis?

Now there is a new type of loan to meet short term financial needs, its called a short-term loan – but is it the best solution to a mid-month money crisis?

The High Street banks and building societies tend to specialise in longer term arrangements when offering loans. 12 months and above are widely on offer but anything shorter is unusual. There is, of course, the possibility of an overdraft but, unless your credit record is good most banks won’t offer you one. Even if they did, overdrafts are not as easy to manage as short term loans because they can be extended indefinitely and can be one of the most expensive forms of borrowing long term.

When your boiler has a breakdown, you don’t have to as well

When things break down, they rarely do so at a convenient time. Tyres never get punctures on a bright sunny day when that half-price sale is on at the garage. Washing machines tend not to break down after you’ve finished the family’s weekly laundry, and the central heating boiler is always going to choose the middle of winter to pack up and die. Not only do these emergency situations tend to occur at inconvenient times, they also seem to happen as far away from payday as they possibly can. They happen, more often than not, when your cash is totally committed to other things and there is little prospect of clawing something back from other areas of expenditure. The need for a fast, short-term loan to boost funds is one which many of us will experience from time to time. When these situations occur, you should always try to obtain the money without taking out any kind of credit since short-term finance is never going to be a cheap option – the good news is, if you have to,  there are options available.

The Bank of Mum & Dad

For many of us, the option of borrowing money from family or friends is a non-starter, but if you’re lucky enough to have flush relatives, then it’s going to be the cheapest option by far. What’s more, mum and dad have already funded us for years, so they’re prepared for it. Aren’t they? It goes without saying that this option only really works with close family members – so don’t try asking for a short-term loan from your cousin who emigrated to Australia 15 years ago, as it’s likely to offend.

Consider selling your unwanted items instead of taking out a short-term loan

How about selling something? There’s always something around the house that you don’t need or use anymore, and its a great opportunity for a clear-out too. If it’s 1 or 2 items, list them on eBay or the local free classifieds – and if you’ve got lots of rubbish, sorry, ‘things’, a car boot sale is a great way to make extra cash if you don’t mind getting out of bed early at the weekend. Of course, as we touched upon earlier, neither of these options are likely to be of use in our scenario. It’ll be at least a week before you get your hands on the cash you need, and the first rule of sods law, is that: its never going to happen at a convenient time.

How about leaving it to your flexible friend?

Credit cards are useful things to have – if you already have one and there’s credit available on it. The danger with credit cards is that you don’t have to pay them off in full, and the temptation is to roll the balance over to the next month by paying just the minimum amount. Before you know it, credit card debt can quickly become an expensive long-term burden, so if you’re the type that’s likely to let this happen, leave it in the drawer. The short-term loan alternative, on the other hand, is normally paid off in full on the day it is due and you have no further need to service it.

In short, the solution is a short-term loan

A short-term loan does exactly what it says on the tin – apply online, receive an instant decision and get cash in you account the same day. Even if your credit history isn’t that perfect, you can still apply for this type of loan.

You can organise a short-term loan entirely online in just a few minutes. Just open your favourite search engine (yes, it’s Google isn’t it? ) and do a search for “short-term loan” – you will be given a endless choice of loan companies from which you can take your pick. If you’re a little nervous about taking out a short term loan online, I would suggest sticking with one of the household names such as Wonga or Quick Quid if you’re looking for short term loans in the UK. However, if you’re a confident surfer, check out some of the lesser known lenders – there are better deals to be had from these micro-lenders if you look around.

Whichever route you take always ensure you know exactly how much you are borrowing, how much you will have to repay, and when the repayment is due. You should also check out the site’s FAQ section and terms and conditions page for further information about the company and their loan offer. The bottom line is: if you don’t like the look of anything you find on the website then simply walk away – there are more than enough reputable short-term loan lenders to choose from.

So there you have it – next time you’re faced with one of life’s little emergencies, you’ll still have to deal with it, but with the convenience of a short-term loan, you won’t need to worry about how to pay for it too.