Your Short Term Loan Options
Loans come in all shapes and sizes, and while most people take out a loan over fairly long periods in order to keep the monthly repayments down, sometimes you can just need fast access to cash to cover you over a short period of cash flow problems, to cover an essential expense, or simply to fund a treat like a holiday. In these kind of situations it doesn't always make sense to take out a large loan over several years, so what options do you have if you want to borrow a smaller amount for a shorter time, and get the cash fast?
Wage Advance / Payday Loans
These much-maligned loans are designed to cover a gap between running out of money and the next payday arriving. They can vary in size from £100 up to £1,000 with repayment due in one single amount with fees on top. It is these fees that account for much of this type of finance's poor reputation - they can be very hefty indeed. The situation gets even worse if you take the option of a 'rollover' where repayment is deferred for another month but a new set of fees are added. This can spiral out of control very easily, which is why new regulations will limit the number of rollovers allowed.
Despite their poor press of late, payday loans can indeed be useful to cover a small cash emergency, providing you only borrow what you need, and are sure you can repay it in full, along with the fees, on your next payday without cause further problems in the month after that.
3 Month Loans
These are basically an extension of the idea of payday loans, but giving you longer to repay and not being quite as expensive. Instead of you repaying the full amount in one go, you will normally repay in 3 monthly instalments. This makes it easier to spread the cost over a longer period, and helps avoid the problem of needed to rollover a loan just to get through the following month. Again, loan amounts can vary from approximately £100 to £1,000
12 Month Loans
As the name implies, these loans allow you to spread your repayments of a full twelve months, making it easier on your budget. Amounts can go higher here, with some lenders offering up to £2,000. While still expensive, 12 month loans are nowhere near as pricey as payday loans, and in many cases you can repay early without any penalties being applied.
The days when loan companies everywhere were offering £15,000 unsecured loans are long gone. These days, lenders are a lot more cautious about how much they're will to offer. This can work to your advantage - where once many lenders wouldn't lend less than a few thousand, many are now happy to lend much smaller amounts over a correspondingly short repayment term. These traditional unsecured loans are likely to be by far the cheapest option for getting cash quickly for a short period.