Having enough finances to cover your needs is of the utmost importance. But sometimes, there are instances when you don’t have enough funds to cover the expenses. This happens when these expenses come unexpectedly such as sudden medical expenses or business expenses.
In times like these, you can apply for a short term loan to cover your finances. As the name suggests, short-term loans are meant for short periods only. In South Africa, several short-term loan providers consider 1-2 years for this type of loan. Therefore, if you opt for a short-term loan, you have to repay it within a year.
When you apply for a short-term loan, you can expect to get a lump sum amount in 24 hours. And it doesn’t matter if you have a bad credit score; you can still qualify for a short-term loan.
A short-term loan is a great way to tackle any immediate financial expense that is temporary.
Short term loan features
- When you apply for a short-term loan, the range of loan amount is R500 to R250, 000.
- You have to repay the loan amount quickly in about six months to a year.
- Within 24 hours of application, you can get the complete loan amount in your account.
- As compared to a long-term loan, short term loan has higher interest rates.
- Although, it is cheaper to repay a short-term loan as compared to a long-term loan.
Steps to apply for short term loans
- Start by determining the loan amount you want to borrow. Make sure that you can repay it comfortably.
- Start by comparing different short-term loan offers and choose a lender that suits you.
- Make sure to agree with your lender on the following terms: the full amount you will repay, the interest rates, the loan repayment period, and repayment dates.
- After submitting your application, the lender will process it. They might check your financial history.
- Once you have been approved, the loan amount will be transferred to your account.
- You can start using the loan amount to cover your existing expenses while starting to repay the amount.
Types of short term loans available
When you start looking for short-term loans, you will find that there are different types you can choose from.
- Payday Loans
These are the most common short-term loans available in South Africa. A payday loan is taken when you want to cover some expenses but you are still waiting for your salary to credit.
Once the salary credits to your account, the lender has the right to take the loan amount with interest. These are high-interest loans and need to be paid in one single instalment.
- Short Term Online Loans
In this type of loan, the complete process takes place online. You can directly visit the website of the lender, fill the application form, and await approval.
Once approved, the amount is credited to your account. When it comes to repayment, the lender can directly take the instalment from your account.
- Merchant Cash Advances
This type of short-term loan is great for businesses that want to support their current lack of finances. When a business gets money from the lender, this gives the lender access to the business’s card terminal.
Now, whenever the business gets payment from a customer through cards, the lender will deduct a small amount till the loan amount is paid in full.
- Lines of Credit
Just like credit cards for individuals, lines of credit can be called credit cards for businesses. They can borrow the amount to cover their finances based on the set limit.
The businesses have to pay the amount back with the interest rates at a later date. Based on the amount borrowed via lines of credit, the monthly repayment amount is decided.
- Invoice Financing
This is another type of short-term loan for businesses, where they can apply for a loan against unpaid invoices. The loan amount is usually a small percentage of the total invoice amount.
Once the customer has paid the invoice, the lender can take the amount borrowed along with interest rates and service fees.
Advantages of Short Term Loan
- Get Quick Access to Cash: With short-term loans, you can get quick access to cash. Since you have to repay the amount within a year, lenders usually don’t hesitate to release the loan amount after approval.
- Pay Less on Interest: With short-term loans, you get lower interest rate payments. This is because the debt has to be paid in full within a year.
- Easy Approval: When it comes to short-term loans, there are no strict guidelines. You don’t necessarily need to have a good credit score. The main reason for easy approval is that the loan amount is less as compared to long-term loans.
Disadvantages of Short Term Loan
- Unreliable Lenders: Short-term loans can be easily accessed and approved but the biggest drawback is dealing with unreliable lenders. Sometimes, lenders charge higher interest rates and unreasonable fees.
- Penalty Fees: With short-term loans, penalty fees for relapse the repayment are quite high.
- Small Amount Borrowing: With a short-term loan, you can only borrow small amounts. If you need a larger amount, you have to go for long-term loans.
Requirements for applying for short term loan online
If you want to apply for loan online, you need to fulfil these requirements:
- A valid ID issued by the South African government showing your age 18 years and above
- Bank statement to prove the bank account activity for the last three months
- Proof of income
Short-term loans are an excellent way to cover your immediate expenses. But make sure that you can repay the loan amount in the given time. It can cost you high if you are unable to repay the loan.
Also, if you want to check out and compare different short-term loan offers, make sure to visit our website Snappy Loan. We give you a comprehensive overview of the latest offers. Just Snap It! And cover your finances immediately.