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HomeMoneyPayday LoansShort-term loans and advances - how to be smart about it

Short-term loans and advances – how to be smart about it

Short-term loans and advances - how to be smart about it
Photo by Andrea Piacquadio: pexels

If you fail to make a smart repayment plan, short-term loans can quickly send you into a financial abyss. There’s no doubt that missed payments are a key reason why payday loans and other types of short-term loans mount up. If you wish to make the most out of pienlainaa, defaulting should be avoided at all costs. The following advice will help you to meet your repayment commitments and keep your head above water:

Calculate What the Loan Will Cost you Overall

While you are searching for a suitable loan, always ensure that you factor in pertinent information. The total amount a loan will cost you includes the interest rate, any additional fees and the due date for payments. Certain banks claim that they provide better rates to holders of their current accounts, however, you could still discover that there are better-value loans offered elsewhere. It is important to do your research and gather all the data, before assessing loans. Look into what occurs if you miss any payments. Will you be penalized, how is this dealt with, and so forth?

Reduce Interest Fees by Repaying Your Loan as Quickly as Possible

Provided you repay it promptly, a short-term loan can be an affordable source of emergency cash. Suffice it to say though, the loan’s total cost will increase in line with the length of the term. Many people opt for the longest term available, due to the lower monthly repayments. Try to avoid making this mistake. Loans with low monthly repayments are extremely costly over the long run. Always opt for a shorter loan term where possible. It might be prudent to repay the loan before the payment deadline. However, you should watch out for early repayment charges in such circumstances. These charges are imposed by some lenders of short-term loans, to deter borrowers from repaying their loans quicker than agreed. Notwithstanding, if you work with a trustworthy lender, you can repay your loan as quickly as you want, without having to pay extra.

Limit Your number of Loan Applications

You are less likely to be approved for a loan if you apply for lots of loans because it gives lenders the impression that you are struggling. Instead, it is much better to shop around and only apply for loans where you satisfy the criteria, so you have a realistic chance of being accepted. Moreover, loan consolidation is a good option, if you have other outstanding loans. This simplifies your finances by tackling other unpaid debts and converts multiple loan repayments into a single, affordable payment.

Don’t Borrow What you Can’t Afford to pay Back

This piece of advice is applicable to loans of all types – not just short-term ones. Only borrow what you can afford to pay back comfortably. One good principle to observe is to ensure that you don’t repay your loan with over ten percent of your net income each month. Obviously, this might not apply if you have multiple income sources, but you shouldn’t have a problem servicing your loan along with your other monthly outgoings – otherwise, financial hardship could be on the horizon. To prevent avoidable interest payments and late fees with payday loans, check that you can easily settle the loan when you next get paid.

It is more convenient to get a short-term loan online, rather than visiting a bank. Typically, online applications for these types of loans do not take long to approve, with applicants often receiving a decision within minutes. Successful applicants get the funds deposited into their bank accounts within one day, which is extremely helpful. You can get a loan with or without collateral from a variety of online lenders, including new P2P lenders.

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