Short term loans vs payday loans – there are lots of choices out there for you if you want to borrow money and pay it back quickly. But what are the main differences between short term loans and payday loans, well that is what we are going to be answering in our latest blog.
The main difference between short term loans and payday loans is usually the number of repayments you will have to make. In general terms, you usually pay back a payday loan about a month or two after you take out the money in lump payments.
With short term loans, you could pay back your loan from two to twelve months. However, this is not always the case and there is a lot of overlap between the two nowadays. So, what is right for you? Let’s find out now, and look at the difference between short term loans and payday loans.
Difference Between Short Term Loans And Payday Loans
If you are looking to take out a short term loan or a payday loan, the application process is really similar. They will want you to answer a few short questions about yourself. In general, what they will be looking for is that:
- You’re 18 years or older
- You’re a UK resident
- You have a British bank account and/or you have a debit card from which they can take repayments
- You’ve got a job and you’re earning £500 a month or more
- You have a mobile phone they can contact you on
Lenders will also need some idea of what your monthly expenses are. With that information, they will be able to work out whether you can make the repayments on the due dates.
Will a lender contact my boss to check where I work? In many cases, no. They will use third party companies to check who your employer is and that you are on the payroll. Some may wish to contact your boss though. If that is something you don’t want, ask them about their policy on this before you apply.
Will you wait longer for a short term loan to reach your account?
Short term loans and payday loans are designed to cover you in emergencies. If you find yourself taking out short term loan after short term loan, it is best to seek advice because that is not what short term loans are designed for.
Why do most people take out short term loans or payday loans? Everyone’s reason is their own but it is mainly for when they don’t have cash to cover:
- Your car breaking down when you need it to work
- Something going wrong in your house which needs fixing straight away
- Your wages if your employer doesn’t pay you on time
- A gap when moving jobs
- Medical expenses
- Funeral expenses
Difference Between Short Term Loans & Payday Loans – Speed
Lenders know you need the money in a hurry and, when they have approved your loan, your money can be in your bank account within the hour.
Please be aware though that some short term loan providers and payday loan companies may need additional information before they make a decision. So, it’s always best to make yourself easily contactable and available if they want to get in touch to complete your loan application.
