Short term loans are popular in Australia for a number of reasons, and one of which is that they are less complicated than long term loans. This type of loan entails a small cash amount that is lent at a higher rate of interest. In theory, it helps borrowers go through their next payday, especially if they are short of cash to sustain a certain need or when they don’t have enough money to cover for urgent financial obligation. Usually, the borrower, or the one availing of the loan, writes a post-dated check in the desired amount they want to borrow and also pays a fee in order to obtain the small cash amount. He or she, however, must always return the money on a certain due date, which is usually at the time he or she receives his or her next paycheck. The check is cashed in, effectively deducting from the paycheck the borrowed amount.
If you’re planning to apply for short term loan, it is important that you weigh the advantages and disadvantages first. This will help you decide if whether or not this type of loan is best suited to your financial standing or necessity.
- They are fast and easy. Short term loans like fast cash, instant cash, cash advance or payday loans do not require complex application procedures. The lending company may only require you to provide basic information, such as your name, contact number, permanent address, and proof of income.
- Modes of payment are convenient. Lending companies accept various modes of payment hence the borrower need not to sweat about it. However, the most typical mode of payment is through post-dated checks that are issued by the lending company to the borrower.
- You can do it online. In order to provide more efficient services to borrowers, lending companies are now becoming more apparent online. Hence, borrowers need not to physically visit lending shops to apply for such short term loans. Needless to say, you can apply and be approved at the comfort of your own home or any other place where there is Internet connection.
- They ensure multiple loan protection. Another great advancement is that there are plenty of lending institutions today which facilitates lending tracking services. The good thing is, fast cash loan is able to prevent one from getting multiple loans at once which may result to larger debt problems.
- What you can get is limited. Short-term loans are only obtainable for fewer amount of money unlike other type of lending services.
- May impose higher interest rate. One of the biggest disadvantages is that such loans have the risk of putting borrowers into having a bad lending credit.
- There are extra fees for extension. If a borrower would like to extend the duration of time that both parties agreed for paying back, an extra fee will automatically be required if one is under a fast cash loan deal. This is different to what other loans do.
While there are disadvantages to short term loan, the advantages clearly outweigh them. Simply put, such loan is best for people who need money fast but do not want to meddle with complicated processes that other kinds of loan may require. Since it is fairly easy to be approved, it can be the best solution to financial obligations that require urgent attention and action.
If you are planning to apply for this type of loan, don’t forget the advantages and disadvantages stated above as they will serve as your reference. It is also important to read more regarding this topic or to consult with financial experts who can help you improve your understanding about short-term loans.