September 3, 2016
Financial Tips for Short-Term Loans
What do you do when you need money? Most of the people are used to ask their relatives or their friends to loan them some money for a short period until they get the paycheck or the salary. However, what do you do if they can’t give you the money that you need?
Going to a bank is out of the questions because you need the money right away, and it doesn’t need to be a significant amount. For this situation, you have the possibility to go to a financial institution and ask for an SMS loan or a payday loan.
Don’t consider that they won’t give you the money – they are customer-friendly and most of the times they will serve anyone.
Let’s see some financial tips for getting short-term loans.
What It Means
First of all, you need to have the right knowledge about this loan. An SMS loan or a payday loan are not your regular types of loans. It’s true that they are for short-term, but they process of eligibility is not the same as with a bank.
Apart from this, the interest rate of any of these loans is higher than what a bank offers, and not everyone can afford to pay back. Imagine that if you take $100 from them, you will have to give back even $200 or $300, depending on what financial institution or lender you have used.
Taking a loan of this type should be only in an emergency situation, like making a purchase or a unique financial situation. You can’t use the money for paying the bills or for daily shopping.
The process of applying for an SMS loan or a payday loan is different from what you find in a bank. The financial institution won’t check out your credit history because they almost expect you to have a bad credit history. However, they will make a different thorough check on you – they want to see if you have a job and for how long have you been working; they want to know if you get a salary or if you have a constant income and they will also check the status of your account.
All this is valuable information for them, because based on it, they will determine if you will receive the loan or not.
It’s different than the scoring that the banks create, as you can apply here even if you have a history of bad credit.
These types of loans are harder than a loan taken for an extended period. The main reason is the interest rate that is higher than what banks usually offer. You get the money almost instantly, but you will also have to give back more money that what you have taken. It may not seem fair, but for those who have an emergency financial situation, this type of loan is the best they can choose.
You will need to know when to give back the money, how much money you will have to pay, what are the consequences if you don’t pay in time and so on.
The agent from the financial institution will need to answer all your questions regarding the loan, and you need to sign the contract only after you have understood the rules that you need to apply to it.
Don’t consider that you will be able to pay your bills with this loan – it’s important to remember that you might enter a debt spiral if you take too much money and don’t pay them back in time.