When a financial emergency hits, a short-term loan can be there to help.
A short-term loan is where the amount borrowed and the interest are paid back in less than a year. It’s not like a bank loan, in that you don’t pay a short term loan off over years and it often comes with a higher APR. The borrowing amount is usually low, starting from as little as say, £50, and going up to around £2,000 or higher in some cases.
Short term loans may be appropriate for people who all of a sudden find themselves with a big expense they feel they can’t avoid, like a home repair or a car repair. They might also be helpful for people who don’t get regular work and need something to tide them over until their next pay cheque, when they can pay back the loan and the interest.
Usually, this type of borrowing is what’s called an unsecured loan, which means you aren’t borrowing against something you already own such as a car. Should you not be able to pay a loan back, the items which you secured the loan against will not be repossessed as payment.
There are many different shapes and sizes of short-term loans, but there are a few main varieties that dominate the market:
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What is a short term loan