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Advantages And Disadvantages Of Short-Term Loans

Short-term loans, and pay day loans in particular, have received a great deal of criticism for high interest rates that lead to greater debt for borrowers. However, short-term loans are like any form of credit in that there is always a cost to borrowing money, and borrowers should never take out loans they can't afford to repay. When people borrow responsibly, short-term loans can provide a solution to a financial emergency.

Advantages Of Short-Term Loans

For one thing, short-term UK loans are relatively easy to qualify for compared with traditional bank loans. Most lenders just require proof of employment and a minimum level of income that indicates an ability to repay the loan. Another advantage of short-term loans is that borrowers can get the money very quickly, often within one or two days. Many lenders also offer flexible repayment plans. At MoneyBoat UK, for example, customers can choose to repay the loan in up to 6 installments for a period of up to 45 days, and there is never a penalty for repaying a loan early.

Disadvantages Of Short-Term Loans

Borrowers have problems with short-term loans when they are late on their payments or unable to repay the loan by the deadline. Late fees can be expensive, and interest will continue to accrue for each day that the installment has not been paid. Some borrowers make the mistake of taking out a second short-term loan to pay off the first loan, and this can lead to a dangerous cycle of ever-mounting debt. If the lender takes legal measures, the borrower may also be liable for court fees. It is recommended that borrowers budget carefully to make sure that loan installments get paid on time.

When To Consider A Short-Term Loan

A short-term loan can provide a safety net in the case of an emergency or serious financial need. For example, a car problem can make it impossible for the owner to get to work, and that could lead to a loss of employment. A short-term loan to cover the repair will be worth the cost. Similarly, medical care should never be neglected due to lack of funds. Many customers take out short-term loans in order to get dental work, eye exams, and other care not covered by insurance.

There are many direct lenders who provide short-term loans in the UK. In order to get the best terms, make sure to compare the interest rates and installment plans of multiple lenders. To learn more about short-term loans, visit moneyboat.co.uk.

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