Short term loan is an extremely effective tool designed to deal with short term monetary crisis. The best part about this sort of loan is that the loan is not collateralize and requires no security. Typically, repayment must happen within a few weeks but it may extend to months for some types of short term loans. Interest rate is usually higher than other forms of collateralize loans but since the repayment period is small the sum accrued as interest is not that high.
Before applying for short term loan, decide on which type of short term loan you want to apply for. There are primarily four types of short term loans namely peer to peer lending, payday loans, advance fee loans and credit cards. Fee for acquiring loans and interest charged is different for every type of loan and you need to keep in mind your requirements before deciding on the loan type you want to apply for.
For payday loans or advance fee loans you will generally require to meet few criteria like your monthly income should be higher than $ 800, you must have a permanent income, you should be of age 18 or higher and you need to be a legal resident of the country. The repayment sum is deducted from your paycheck and your credit limit is dependent on your salary. This kind of loan can even be availed with a bad credit score which has attributed to its popularity.
Peer to Peer Lending is a form of borrowing that has become popular in recent days because of the convenience of the method. The process is not overseen by any financial institution and by this method you might acquire private finance from previously unrelated individuals. Tools of various complexities are provided on the website for checking credit score and the amount that is disbursed has a lot to do with your credit score. Loans of these kinds are mostly disbursed to individuals rather than business houses or corporations. Business loans are also offered by a few select companies and in that case the credit score of the business and its promoters are checked before approval. Interest rates can either be fixed by the lender or as a borrower you can present your credit score and ask for different lenders who are interested.
Consider factors like how quickly you can repay the loan and the sum you need to borrow. Take into account that the interest rate will be steep for every form of short term loan and for higher principal, interest accrued may even be high for short term periods. So the repayment sum will include the interest amount also and before the due date you need to have the sum at your disposition.
You need to keep the above factors in mind before shopping for short term unsecured loans. If you have a good credit score the best option is reverse auction in peer to peer lending. The best option if you have a high salary and a bad credit score is payday loans.