It is natural to feel that by borrowing money you have somehow “failed”. That by having to ask for financial help you have somehow let yourself, or others, down. I would argue very differently, especially considering that virtually all of us are currently paying back borrowed money anyway. There is no shame in taking out a short term loan.
Short-term and mid-term loans may be somewhat demonised in popular culture (and like any industry there are rotten eggs around). However, the product serves an important function for people needing swift access to funds.
So who could gain from this product?
Those with a poor credit rating
Millions in the UK have a mixed credit history, and thus struggle to obtain finance. Banks especially will often reject those that do not have a good credit score for short term loans. This has left many with nowhere else to go. Shorter-term loan lenders, those that specialise in this product, are therefore an attractive and viable alternative. Whatever your needs, and whatever product you may choose we are keen to point out that borrowing is normal. There is no shame in taking out a short term loan.
The problem for borrowers is that having a bad credit score does not automatically mean you are totally unreliable and terrible with money. There are many contributory factors to a poor credit score, Even having little credit in the past can have a negative effect on your score.
Thus, taking out a short-term or mid-term loan is actually a good way of repairing a poor credit score, This is because reasonable levels of credit and regular repayments of the debt portray an image of a reliable borrower to lenders.
Unforeseen circumstances
Anyone can be hit by a sudden emergency – a car engine blowing up, a vital home repair, or any other number of sudden events. Events that mean that if you don’t have savings, you may have great difficulty accessing funds at such short-notice. Banks are not quick to release funds, so a one-off loan paid back in a short space of time makes sense in many circumstances.
It could actually be cheaper than other products
There is a general perception that short term loans are a “rip-off” and do not present good value for money. This is because all loans in the UK must quote an annual percentage rate (APR). Traditionally loans were only offered over longer periods of time, for at least a year and usually much longer. Thus, such rates were a fair way to assess a loan. Nowadays many loans are tailored for much quicker repayments, so the annual rate can be misleading. The only true way to judge the loan is to look at your total repayment amount. Assess if that is a deal that is acceptable to you. If it is, proceed and remember that there is no shame in taking out a short term loan.
What’s more, it may actually be cheaper. Many credit card companies for example lure in new customers with very attractive introductory offers and they are often great. But these companies are not charities and will eventually make money back off many of their customers. Once those introductory periods have ended, the APRs payable on outstanding credit can be very large indeed. Many get trapped paying off interest without actually making a dent in their existing debt.
It is quick
Whatever the length or amount of a loan, often life’s various obstacles mean that people need access to money quickly. As mentioned elsewhere, obtaining credit from your bank can be either unsuccessful or just a cumbersome and lengthy process. Short-term or mid-term loans allow lenders to supply funds to borrowers quickly and efficiently, taking the stress out of the whole process at the same time. Borrowers tend to get money within a couple of days, and sometimes even on the same day they applied.
An easy to manage alternative to endless credit cards
I recently took out a loan. There were credit card deals out there that could have allowed me to transfer existing card debt with accompanying attractive low rates, but to be honest I’d had enough of this endless cycle of moving money around cards. It wasn’t saving me money in the long-term anyway, and took great dedication to maintain the constant flow of money from account to account, taking advantage of offers without running past the introductory offer period and thus accruing high levels of interest charges. For me, it was better to consolidate my debts into one monthly payment, especially considering the competitive loan rates available nowadays. For me the peace of mind the move has afforded me has been priceless.
The key is still to be responsible and to use credit in moderation
Loans are not designed for people to have access to continuous piles of money. They are there to help you out when you need a little helping hand in life, and are not designed to prop you up in the long-term. There is no shame in taking out loans – most of us have huge loans in the form of mortgages, so it’s hardly embarrassing to take out a much smaller loan. However, the key thing is to borrow sensibly, and for good reason. As long as you budget accordingly and discipline yourself whilst making repayments, they can be a very beneficial source of funds in the short, mid or even long-term.
Do what is best for you. There is no shame in taking out a short term loan. It may be beneficial and help provide peace of mind for you and your family.
