Representative 49.7% APR
Representative example: Borrowing: ?1,200 Interest: 0.34% per day for up to 75 days (124% per annum, variable) Representative: 49.7% APR (variable)
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Representative example: ?500 borrowed for 90 days. Total amount repayable is ?. Interest charged is ?, interest rate 140.0% (variable).
Short term loans are most simply defined as a form of unsecured loan that offers quick cash, and has a repayment period of 12 months or less. The loan amount can range between ?100-?10,000 – more than enough to handle most unexpected expenses. Short-term loans are a boon to those who find themselves with a sudden, urgent need for funds, perhaps to pay for hospital care after an injury, or to cover vehicle repairs after an accident.
Having easy access to emergency funds is not without cost, of course. The Financial Conduct Authority (FCA) classifies short-term loans as “high-cost, short-term credit,” or HCSTC. The high-cost element is the interest rate, which is significantly greater than that of a secured, long-term loan. Why is this?
Lenders undertake a considerable risk by offering credit without security. The higher interest is simply their way of limiting liability. When weighed against the dire need of a true financial emergency, the price is not unfair. Additionally, when determining the interest rates for UK short term loans, lenders must observe certain regulatory limits, which provide a safeguard against exorbitant, unreasonable fees.
Here at Now Loan, we aren’t content to simply meet regulatory requirements, instead, we strive to get you the cash you need as quickly and as cheaply as possible. So, while all of the above defines short-term loans in general, a short term loan with us is best defined as the credit option tailored to your circumstances and financial needs.
Short-Term Loans vs Payday Loans
When you think of fast credit, short term payday loans are probably the first things that come to mind. The term “payday loan” has come to represent any short-term lending option, though that is inaccurate and can lead to costly confusion. For instance, you may expect certain interest rates, or be convinced you have more or less time to repay your loan than you do. Thoroughly reading the terms of any loan contract you sign should prevent such mix-ups, but it also helps to understand the different types of loans before you apply.
At first glance, payday loans don’t seem much different from other short-term loans. They offer quick, often same-day funds, and they have a small repayment window. Yet, these features are far more limited with a payday loan.
As their name suggests, payday loans are typically meant to be repaid by the borrower’s next pay date. In such cases, payment could be due just a scant few days after the loan is approved. A loan period of 1 month is also common, and, as efforts have been made to ease the borrower’s burden, having 3 months to settle a payday loan is not unheard of.
The brief nature of these loans naturally limits the amount of money that can be borrowed. A lender will only approve an amount that you can reasonably be expected to repay with your next few checks. Don’t expect to get thousands of dollars with a payday loan.
The short-term loan offered by NowLoan is the better alternative. Higher potential loan amounts mean you can tackle a wider variety of monetary emergencies. And, with up to a year to plan your payments, you can shrink them down into manageable instalments that won’t impact your ability to meet other financial responsibilities.