Four Considerations Before Applying for a Short-Term Loan

Taking a short-term loan is usually done with the sole aim of avoiding the hassle of paying long-term EMI’s.

It is possible to apply for short-term loans online and get them approved within fifteen to twenty minutes if you have steady employment.

Short-term debts help manage immediate money necessities easily and pave the way for quick payment without paying huge interest. Consider these four factors before opting to apply for a short-term loan to maintain a good credit score and pay off the debt without much tension.

Lower the loan amount

Do a manual calculation or seek help from a financial expert on the amount you desire as a debt. The loan amount is usually paid back with interest in a particular period. Analyze the reason for the short-term loan like a medical emergency, an unexpected repair in the house, etc.

Check for other alternatives to lower the principal amount or a part of the debt by selling or cashing in on the long-term investment bonds or using the savings. If the short-term loan is for a down payment of a car or a home, consider how much depreciation will occur by the time you finish paying the entire amount. Negotiate with the seller to bring down the down payment amount so you can borrow less loan.

If another family earning member is above 18, consider breaking the debt amount and getting small loans instead of one huge amount to bring down the interest rate. Consider the various options involved in the process and ask the company you are applying for the loan about tax reductions on such debts if you list it under business expenses.

Look for versatile payment options

Talk with short-term loan lenders regarding the best payment options and choose to pay once in three months rather than making monthly payments if possible. This option will give you time to plan the house’s finances better and create extra income source opportunities to pay for short-term loans.

Some lending companies agree to start collecting back the money after three months if you agree to pay more interest. Use such options and try to pay back the loan in full within that period to avoid paying the interest. Analyze such less preferred payment options and select the best one that suits your circumstances.

Some short-term lending companies like payday loans offer you a chance to pay back the entire money within 14 days from the day you have borrowed the money without charging any interest or charging just $10 to $20 in interest.

Try to get a credit card within that period and pay off the short-term mortgage, which will usually have a higher interest than the credit card interest. If possible, try to sell any valuables in the house, stocks, or bonds and pay off the money within that grace period to avoid paying the interest rate.

Compare different lenders

Compare the different lender’s schemes and check their reputation in the market regarding their customer handling skills. Check for interest rates and transparent fees thoroughly by comparing the APR or annual percentage rate of various lenders.

Never feel shy to negotiate and try to squeeze the best interest rate from them. Most short-term money lenders offer the money online just by using the details given to them in a form and doing an automated check.

Contact their customer support and ask to talk with higher authority and negotiate regarding lowering the interest rates, bonus for paying early, payment period and the amount offered, etc., in person to get a better deal.

Usually, people with good credit scores get a chance to bargain on the interest rates. If possible, offer collateral or a guarantor to further down the interest rate and try to pay off the debt as promised or earlier to earn more bonuses and bigger loans during another emergency.

Seek loan broker services

Most people fail to use the loan broker services online and offline fearing the fees they will charge. In reality, using their expertise will help you choose the best type of short-term mortgage suitable for your economic condition.

The brokers have more knowledge about finance than you, and they will be able to guide you with several new options you have never thought of before, which might help you save a lot though you have to pay them a small sum as a fee.

The loan broker services will link you to small banks and credit giving institutions that charge much less interest than the well-known names in the market. Choose wisely with expert guidance to get the lowest interest rate and no extra fee payment on the short-term mortgage.

Explain to the loan broker regarding the emergency and the necessity to get immediate monetary support. Seek their advice regarding closing the investments and paying off the debt without paying much interest within a brief period.