Over 8 million people in the UK today have trouble paying off their bills and household debt. That’s a startling statistic, and it should give us pause before we leap into a loan without thinking it through – but are there times when a short term loan really does make sense and can actually be beneficial?
Indeed, there are such situations. And knowing how to recognize them and how to tell the difference is key to the success of both businesses and personal finances for many. Below, we will look at 4 clear examples of when it might be the “right time” for a short term loan.
1. To Plug Up Cash Flow Deficiencies.
Taking out a loan when you don’t have the income to repay it is foolish, let’s face it, even if you could get approved for such a loan. But on the other hand, cash on hand may be temporarily insufficient even while overall income is sufficient. This is common for many small businesses, which is why business owners are among the most frequent consumers of small, short term loans.
A lack of cash flow can lead to other bills being late and accruing late fees that would hit you harder than the interest and fees for the loan. And for businesses, the alternative might be shutting down or scaling back operations – an alternative that clearly is to be avoided at all costs.
2. An Emergency Expense Pops Up
A second situation that often merits resort to a short term loan, like those offered by www.bingoloans.co.uk for example, is when an unexpected emergency expense hits you at the wrong time. It could be a caved in or badly leaky roof following a major storm, a vehicle suddenly out of commission, or a medical emergency you were unprepared for.
There are some expenses that are too important to deny and too urgent to delay on. You don’t have time to apply for a bank loan and wait weeks for approval, with approval being anything but certain. You need cash now so you may want to try with an online lender.
3. Your Credit Score Is Under Water
Bad credit, or the lack of any significant credit history at all, is going to make it difficult to secure a more “traditional” loan type. But the good news is there are many online lenders of personal loans and payday loans who accept below-average credit routinely.
These loans are generally not based on credit history but on your current income level (ability to repay). You simply have to verify income and give out a few basic pieces of financial and personal information in the application form. It takes only a few minutes and approval is virtually guaranteed regardless of credit woes in your past.
4. Starting Or Expanding Your Business
You may be getting ready to start up your own business and finally “be your own boss.” Maybe you’ve already lined up your main financing, but suddenly, it is costing more than expected. You risk running short on your savings before you reach your “break even” point and begin to actually make a profit.
Instead of opting for a title loan and risking your personal vehicle or a home equity loan and risking your home, you could resort to a short term fast cash loan. Payday loans can be taken out for anywhere from a few months to a few years, for anywhere from several hundred pounds to several thousand. This could be a way to get you through till your new startup or expansion move takes root.
Loans can be beneficial when used as tools to accomplish something instead of mere acts of desperation or random behavior. A short term installment loan can help in the four ways mentioned and more.