Short-term or single payment loans are a fast-growing part of the consumer finance market. Increasingly available online and on mobile phones, they provide convenient and quick access to provide you with short-term cash to help you through the challenges that we all have in our fast-moving daily lives. So if you have an unexpected bill from a car breakdown, a leaking pipe or a dental visit, then a short-term loan can help you through the month.
Short-term loans fill a large gap in the market for those people who are not being adequately addressed by the traditional banks. Many customers simply cannot access credit through the mainstream banks because their credit scores are too low. Short-term loans provide these customers with a convenient and efficient solution to the ‘credit gap’, allowing them to live their lives. Another distinction from the traditional banks is the focus on technology by the leading alternative finance providers. Rather than being constrained to dealing with banks on the high-street and in conventional “9 to 5” opening hours, online access means that in many cases you can arrange and manage your loan 24/7 at any time and at your convenience. This means you can deal with your financial affairs online at the times that suit you and sort out an urgent payment when it really matters.
Short-term loans are usually of modest size, typically €300-400, but can extend up to €2,000 (depending on the country and provider) and must be paid back in one payment over a short period of circa 30 days. They are designed for unexpected situations, when immediate cash is the only solution. Because the loan has to be repaid in one payment, over a short period of time and carries a high rate of interest, it is important to understand that such loans should not be used to resolve any long-term financial problems.
For some forms of longer term finance, instalment loans provide the answer. Instalment loans are meant for larger, planned expenditures like home improvements, medical expenses or even a wedding when a little bit more cash is required to cover the cost. The loan is usually repaid in a number of monthly repayments. Again, alternative finance providers offer a service here which may not be available to you through the traditional banks.
It is important to evaluate whether these financial instruments are the right choice for you and your circumstances. So BorrowResponsibly is designed to provide background advice and information so that you can fully evaluate your lender and act responsibly in deciding to borrow.