Using the financial parlance, a short term loan is one that requires a payoff in a certain period of time. Think payday loans. Some of the larger universities in the country provide short term loans for students to pay for books; terms for such loans are generally less than 60 days with no interest charged. However, such is not the case when seeking financing online or in small strip mall payday kiosks. These unsecured, quickie deals are available to any person who can provide a minimum of personal information, as well as three months of pay-stubs from work. Most short term lenders use different underwriting procedures and guidelines. An example would be the lender giving you a loan and charging $20 bucks for every $100 borrowed. However, what the borrower may not understand is that out of the $20 dollars, only $5 went toward the principal; the other $15 is pocketed as a “fee.”
Look folks, lets not kid ourselves or get overly exercised about short term loans and fees charged therein. By this time it should be common knowledge that private lender interest rates are much higher that any traditional bank loan. When you need the money, you need it, simply because it provides you with a quick “parachute” for the unforeseen circumstances that got you in this mess in the first place. Of course it may be embarrassing, but it may also be a lesson learned. Actually, because of the fact that there is an overflow of lenders offering short term loans with egregious rates, it has prompted one online debt management agency to suggest a new law be put in effect forcing these type of lenders to erect a window sign stating the following: “Caution: Short term loans in any form may be pernicious. Read and understand all paperwork before making a decision. Also, beware of any balloon or prepayment clause in any contract you sign in this office.
As it is with most things in our daily life, there are alternatives and choices. One such alternative to short term, egregious personal loans would be negotiating with a small, local community bank or credit union. These lenders will offer better personal loan rates plus borrowing terms of $1,000 or more depending on your job security, and the fact that you do pay your necessary bills on time. These loans also will, in most cases, not require any collateral.
The consideration here is that you should be careful and alert when considering an unsecured short term loan. Not obeying the rules of the financial game could be cause for default, attached wages, and even procedures taken to drain your bank account. So pay off all unsecured personal loans as soon as possible; for sure on or before the date the loan is due. This way you will eschew any late payment or other inflated charges, and hopefully, not be subjected to traveling down this “I need help fast,” road again.