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If you are a citizen of the UK, you would never have to ask your relatives and friends for a loan. All you need to do is browse the internet and find a lending company that offers short-term loans. Short term loans are loans that the borrower can pay in less than a year. Agencies that regulate lending services in the UK regulate the interest rate, which might be higher than the interest rate for long-term loans. Still, residents of the UK prefer to take this type of credit for the following reasons:
Repayment Can Be in Several Instalments
When you take a short-term loan, you can pay back in several instalments. For a six-month loan, you can pay in six instalments for six months, which is once a month or six instalments which are twice a month for three months. Spreading the payment in several instalments reduces the total amount to pay for every repayment schedule.
Convenient for Emergencies
Emergencies might require getting your hands a few hours after you realise you must find money urgently. Asking for a loan from friends and relatives can be embarrassing, take time, and full of uncertainty. When you apply for a short term loan, processing takes place the instant you sent your application and approval within a few minutes. You would have the cash you need the same day that you applied.
Collateral Not Needed
When you want to borrow a significant amount, lenders would usually ask for collateral. You could use your house, car, and anything of value as collateral before the lender would approve your application. Once the lending institution accepts the guarantee, you would get your money from your bank account. However, if you cannot pay back your loan, the lending company could seize your property. To prevent this from happening, make sure to make prompt and regular payments.
Varied Repayment Period
The borrower decides the repayment scheme as long as it is no longer than a year. Choose an option that is convenient for you and one that would allow you to make payments without delays. If you can pay back your loan within three months instead of within six months, you would be spending less on interest, and you would feel relieved that you are now debt-free.
Limited Amount to Borrow
Short term loans are usually between £100 to £10,000 payable in three to 12 months. Because of the limit, you could not borrow more than what you can afford to pay.
Few Requirements
Applying for a short term loan is easy because of the few requirements. You would only need an identification card with your permanent address and employment certificate. Short-term lenders do not give much importance to your credit rating.
No Upfront Fees
When you take a short-term loan, the lender will not deduct processing and other fees. Instead, the lending company will add all charges to the cost of the loan and include an amount every time you make payment. You can also ask the lender for the lowest price of a loan.
Helps Build Credit Record
Because of the short repayment period, you can build your credit score faster and easier. Every time you make an on-time payment, it would show on your credit record. After six months of repaying your loan, you would have something positive on your credit history. The next time you need a more significant amount of money; you could qualify for bigger loans, lower interest rate, and qualify for long-term borrowing.
For the residents of UK, short-term loans are the best option when finding solutions to financial emergencies and other needs.