Factors to Consider Before Deciding to Take a Loan for Short-Term Period

We are facing not just a health crisis right now, but a major economic crisis as well. Economies all around the world has seen a major setback in the past few months that it has seen in decades. In these times of financial crunch, we are all bound to face situations that can shake our cash resources. However, loans and its consequent interest rates is what we all fear. Not to forget the process involved in the sanctioning of a loan.

Short-term loans could prove to be helpful in these difficult economical scenarios. LoanPig identifies Short Term loans and make them available for you in the quickest possible way. They provide a way out for working individuals who need a temporary fix to their current cash crunch. If you are a UK based citizen above 18 years of age, you pass the minimum basic requirement for loan application with Loan Pig.

Factors affecting the benefits of short-term period loans

1. Loan type:

• Personal loan gets easy grants if you can produce your income and business proof.

• While for a business loan, you need a purpose to meet for which you are seeking the loan amount.

• You can also take loans for your upcoming wedding, higher education, payday loan, and even borrow small amount for holidays.

2. Rate of interest charged:

• This is an important factor that must be considered before agreeing to the terms of a loan.

• You must not end up paying interest equivalent to the principal amount.

• The interest calculated is also based on the credit score, so if it high you have a good chance of getting low interest rates on the loan amount.

3. Loan term:

• When you apply for a loan to manage immediate cash crunches, you must evaluate how long the crunch will last.

• You need to pay back the loan within a year to 18 months at most.

• The term will also depend on your affordability of repaying the amount.

4. Down payment and hidden charges:

• Talk to the credit facility and read all the terms very carefully and look out for hidden charges such as processing fees, underwriting fees, or admin fees.

• Avoid borrowing money from such lenders.

• Check if you can give a percentage of the amount as a down payment if not you need to search for another lender.

5. Credit rating:

• This is a major driving factor on how easily your loan can be granted.

• It is a cumulative score derived from the sum of re-payments and defaults of your previous loans.

• Talk to your accountant and analyze your credit score.

• If your credit score is low, it will be a difficult process and you might even have to pay a higher rate of interest.

These 5 are the most important factors that you need to consider before applying for any type of loan. You should steer clear of lenders who charges unnecessary upfront fees and high interest rates despite a good credit score.

While cash in hand gives us a lot of security, in the time of crisis we fall short of cash at times and need help to manage our finances, borrowing money for a short period can really prove beneficial in such times.