Has an emergency popped up where you have to spend money unexpectedly? Are you concerned that you don’t have enough cash to keep you going until your next paycheck?
If so, don’t worry! Today, you can get a short term loan to get you through until the end of the month.
Are you applying for short term loans online? Here are 5 tips that will get your application accepted.
To help you make the best choice, we’re going to share 5 tips that you can use when applying for short term loans online.
1. Consider Why You Need a Short Term Loan and Do Your Research
Short term loans involve borrowing a small amount of money for a short amount of time. They usually have high interest rates but can act as a quick solution to a financial emergency.
They’re also the perfect alternative for those with bad credit as the lender often doesn’t need more than proof of employment, a phone plan, or a guarantor.
With these high interest rates in mind, it’s important you do your research before signing on the dotted line.
Before taking out a loan consider, what you will use it for.
For example, a short term loan can come in handy if your car has broken down. With this type of loan, you’ll be able to pay for the repairs and make the repayments with your next paycheck.
These types of loans should not act as a long-term solution. For example, to pay monthly bills or other living expenses. If you feel you need a loan to pay for your living expenses, it’s time to cut costs or ask your boss for a raise.
If you feel a short term loan is your best option, shop around. Not all companies will offer favorable rates. In fact, some will do their best to rip you off. Research the loan company online before signing an agreement.
2. Don’t Borrow More Than You Need
In various parts of the world, including New Zealand, companies are providing loans with interest rates of more than 500% a year.
Not only this, the loan requirements also ask borrowers to sign what they call “wage deduction authorities.” This means that if the borrower cannot make the repayments on time and in full, the loan company has the right to deduct these costs from their wages.
With lenders doing everything they can to increase interest rates and get their money back quickly, it’s important that you don’t bite off more than you can chew when choosing between short term loans online.
Additionally, some lenders describe this agreement as irrevocable. With this in mind, you must read the small print. Aside from putting yourself in a sticky situation, these terms are illegal under the section 5 of the Wages Protection Act 1983.
Whether you work with an honest and reputable lender or not, the interest rates on short term loans online are high. As a result, you must choose an amount that you can pay back as quickly as possible.
If you default on your repayments, you may find that the company has the right to deduct your loan from your wages. Additionally, the interest rates may put you in a lot of debt in the long run.
3. Don’t Recycle One Loan to Pay Another
Short term loans should fix temporary financial problems. They should not act as a way to pay off other loans.
They’re extremely popular because they don’t require the borrower to go through a credit check.
Unfortunately, rather than fixing your financial problems, they can make them worse. If you don’t use these types of loans in a responsible way, you may end up in serious debt.
In fact, there are very few circumstances where debt recycling is a good idea. While it can benefit those wanting to make larger investments, this technique should not be used with short term loans.
4. Read the Terms and Conditions
Whatever you do, read through the terms and conditions with a fine-toothed comb. Often, loan companies hide fees and hidden charges in these T&Cs and in the fine print.
Invest time into comparing loan terms and always choose the lender with the lowest fees. These fees should include the interest rate and the Annual Percentage Rate (APR).
The APR is the annual rate charged for borrowing the money. Because loans come with various interest rate structures, fees, late penalties, and various other costs, the APR is a simplified computation of your loan.
It is the figure that will show you a bottom line number that you can use to compare loans.
That said, stay aware of any other costs. Some lenders are more trustworthy than others and some will do anything they can to make extra money.
5. Contact Your Credit Card Company
The key to avoiding having to borrow money through short term loans online is to investigate other options.
Credit card balances in 2014 were just under $6 billion in New Zealand. Not only this, of the $5.46 billion credit card debt held on personal cards, nearly 70% was charged interest.
With this in mind, these forms of finance should not be taken likely.
That said, if you’re in this situation, you may want to consider contacting your bank in regards to a low-interest credit card.
Having an emergency credit card could get you out of some tricky situations with much lower interest rates than a short term loan.
On the other hand, if you already have a credit card, contact your bank to find out if there is anything you can do to lower your monthly payments. You may find they have an opportunity for you to lower your APR as well.
Look at Short Term Loans Online
There are tens of thousands of short term loans online available for you to choose from today. Each online lender offers different terms and a variety of repayment options.
Before rushing into a decision, make sure to find a loan that addresses your financial problems. Check that this loan comes with manageable repayment options and always go with a reputable lender.
At Pretty Penny, we treat every borrower the same regardless of their circumstances.
If you have proof of employment, a phone plan, or a guarantor that can vouch for you, contact us today to find out more about our short term loans.