How to Effectively Use Short Term Loans

If you aren’t in a position to save, don’t have emergency cash to fall back on, and payday is still some way away, a short term loan – also known as a payday loan – might be worth considering. Short term cash loans can provide the financial flexibility you need to ensure your affairs are in order. This is especially so when unforeseen circumstances pop up. They give you access to the money when you need it most. Small loan amounts and short repayment times make these loans ideal for when you need cash quickly. Only proceed when you can afford to pay it back over a short period of time. We have taken a look at how to effectively use short term loans.


However, it is important to remember that short term cash loans are not long term financial solutions. Sure, if approved, you can have the money in your account almost immediately, but it is vital that you take the time to consider when you should take out a short term loan and the costs involved.

When should you use a short term loan and how can you use one effectively?

Typically, short term cash loans are used for emergencies; car breakdowns, healthcare, unexpected bills, household repairs and other things that you need to pay off immediately but can’t due to cash flow issues. If you want to use a short term loan effectively, you should:

Use it for the things that really matter

Rather than using your short term loan for a spending spree, night our or a holiday, you should use it – as mentioned previously – to cover unexpected costs. Think household repairs, health issues, and personal crises.

Short term cash loans are not ideal for major projects, investment, paying off large debts or any financial activities that require a significant amount of money. Also, you shouldn’t use short term cash loans to manage existing debt.

Create a Budget and Stick to it

A short term loan might help you out of a difficult financial situation, but you want to make sure it lasts you until your next payday. With this in mind, budget! Make a list of your emergency expenses – such as those listed above.

Meet Your Repayment Schedule

Short term loans can help you to cover unexpected costs, but if you do not pay the lender back in full, on time, you may suffer further costs and damage to your credit rating. Where possible, stick to the repayment schedule, you will pay as per the agreement and avoid incurring any additional charges for late payment. If you are having difficulty meeting the repayment schedule, get in touch with your lender. If they do not know, they cannot assist you.