Top 3 Disadvantages & Advantages of Short-Term Installment Loans
There are many reasons unexpected expenses can arise, including medical bills, home damage, pay cuts, and even loss of income. Perhaps your family breadwinner is unable to work for a few months because of illness or injury. Or your primary vehicle needs repairs you can’t afford.
These unexpected expenses can easily blow through your monthly budget and leave you with little rent or food money. These situations are why many people resort to short-term installment loans to cover unexpected or difficult personal expenses.
How does a short-term installment loan work? You can borrow money and pay it back plus interest in a short-term installment loan. Usually, this takes less than a year. A short-term installment loan might be a good option if you are facing financial difficulties and require cash quickly.
If you are considering whether a short-term installment loan is right for you, here are the top three benefits and drawbacks of short-term installment loans.
What are the opportunities of a short-term installment location?
You might be able to benefit from short-term funding for many reasons. The following are three of the greatest benefits:
Quick payout to get the cash that you need when you need it.
Borrowers with poor credit are still eligible for a loan.
Flexibility in structure and payment options
1. Quick Payment
You may need cash fast if you’re in search of a short-term installment loans. A short-term installment loan can be approved within hours. This is particularly useful in emergency situations where you must make a payment quickly.
Short term loans don’t require lengthy approvals as with other types. Online applications are possible for most loans. You can get the loan funds the same day or next business day depending on when you apply.
The money is directly deposited into your checking account. The great thing about short-term installment loans, is that they can be a huge help for people who have no access to funds.
2. Borrowers with Bad Credit – Opportunity
For approval, short-term installment loan lenders don’t place a lot of emphasis on your credit score. It is more important to show proof of employment, a steady income, bank account information, and that you are at least 18 years old.
This is good news for those with poor credit or limited credit histories. You don’t need to be embarrassed by your credit score to get the emergency cash you need for an unexpected expense.
There are many types of short-term installment loans that offer incredible flexibility. This is especially useful if you have cash tight but anticipate financial stability in the future. The MyFundingChoices.com staff will go over the terms and conditions of your agreement, including the payment schedules and interest rates.
A short-term installment loan offers a shorter-term commitment. MyFundingChoices.com offers repayment terms up to three, six, or nine months depending on the amount you borrowed. You don’t have to worry about your large debt hanging over your head for many years. As long as your repayments are on time, you can put your efforts into the immediate future and get out of your financial mess.
Disadvantages from Short-Term Installment Loans
There is no one financial solution that works for everyone. Here are the top three disadvantages to taking out a short-term, installment loan.
1. Higher Interest Rate
The main drawback of a short-term installment loan, however, is the higher interest rate. This is often much higher than for longer-term loans. Higher schedule payments can be caused by higher interest payments, in addition to the repayment of the short-term installment loan amount.
However. Remember that a short-term installment loan will require you to repay the lender in a very short time. This means you’ll pay higher interest rates for a shorter period than if you had a longer-term loan. The more you owe the lender, the higher your interest rate will be. While long term loans might have lower interest rates than short-term installment loans, you will still be paying them over many years. A short-term installment loan might be more affordable depending on the terms.
2. Potential Damage to the Credit Score
Repaying your short-term installment loan on the agreed upon time can give you a big boost in your credit score. However, failing to do so could cause your credit score to plummet.
A short-term installment loan with outstanding payments will cause your debt-to income ratio to rise, which can affect your credit score. If you have bad credit or very little credit, this can cause you to lose your ability to borrow in the future.
Be honest about your ability to pay back the loan on time before you take out a short-term installment loan.
3. Debt Cycle
A short-term installment loan to cover short-term cash shortages is a good option if you have a problem spending too much. Sometimes people fall into a vicious cycle where they make expensive purchases only to find themselves in short of funds. This leads them to need a loan at a high cost.
Repaying the loan can put additional strain on their finances. If they continue to spend excessively, they may need another loan. This will keep them in debt and perpetuate the cycle of borrowing and accruing more debt.
This article has not covered the disadvantages and advantages of a short-term installment loans. However, they can be a great option for those who need immediate cash in an emergency.
You can apply online at MyFundingChoices.com to determine if this loan is right. Our well-trained staff will help you decide if this short-term installment loan is right.