As with long-term borrowing, short-term borrowing has risks attached to it. The main risk is irresponsible borrowing. However, this should be a greater risk for long-term loans as a larger amount of money is involved. If you want a short-term loan, make sure you can afford it – defaulting will cause a barrage of problems, including poor credit ratings.
Benefits of short-term loans
- A good start. Short-term borrowing will give you experience of the loan application process. You will get familiar with interest rates and repayment commitments as well as the ways of finding a good lender. It will teach you to be a responsible borrower as you will learn to prioritise loan repayments and make timely payments.
- A good credit rating. Lenders lend freely when you have good credit ratings to show for it. This helps them ascertain how much of a risk you are. A bad rating will make it impossible to get credit.
- Easy and convenient. If you need money urgently, applying for a short-term loan is simpler than borrowing from friends or a bank. If you lack a credit score or don’t have a credit card, a short-term payday loan can come to your aid.
Keeping tabs on your credit score
There are many agencies that help you keep tab on your credit score. Experian and CallCredit are two familiar names that analyse how people manage their credit and repayments and accordingly assign a credit rating to them. A good rating will make it easier for you to get short-term loans.
You can compare rates for payday loans and other short-term loans to get the best deal. Allthelenders allows you to compare various lenders in the payday loan and short-term loan industry. The site is authorised and regulated by the FCA, making the result credible and authentic.