If you find yourself in need of money at short notice, you may want to turn to a short-term loan.
They can get you out of tight situations like tiding you over until payday or paying an unexpected repair bill.
Despite the common misconception that these loans are ‘high-risk’ and ‘unpredictable’, many do not realise that the Financial Conduct Authority (FCA) governs the way short-term loans are regulated, meaning there are safety nets in place.
Both Moneypod and our panel of trusted lenders are FCA compliant and place a high priority on excellent after-sales care and only lending money to people who can actually afford to repay their loans.
So, how can a short-term loan be of benefit to you?
The longer you take out a loan, the more interest you pay. Short-term loans offer a quicker alternative – you’re paying interest for a shorter time, meaning that it doesn’t get as much chance to build up. Although flexible short-term loans often feature a slightly higher interest rate, you may find yourself saving money in the long run.
Similarly, lower interest on a short-term loan when you put up security. This is called a ‘secure’ short-term loan and means that the lender takes an asset – for example, your property – as their protection on the loan defaulted. In this case, the risk of lending to you is lessened because of the linked asset, which results in a lowered rate of interest.
When you successfully pay off a short-term loan, it’s really positive for boosting your credit rating. Showing that you can pay off a loan before the deadline sends a positive message to lenders checking your credit score.
They can see that you are responsible and that you manage your finances effectively which means they’ll be more likely to lend to you in the future.
For many people, the most attractive feature of a flexible short-term loan is its immediacy. With a few clicks, you can access money you may have to wait days for had you gone to a bank or credit union.
Moneypod works with a number of FCA-approved lenders to try and bring you the best loan we can within the quickest time-frame possible. There is no fee involved in this process!
If you’re looking to improve your credit score in order to secure a loan in the future, a flexible short-term loan can be a highly effective way to do so. If you take out a short-term or payday loan, you can pay it back faster than the agreed term – that’s one thing that will boost your credit rating (more on that later).
Should you wish to take out a slightly larger loan further down the line, not only will you have improved your chance of being accepted, you’ll have increased the numbers of lenders who will strongly consider you as a good risk. You’ll be looked at more favourably when they perform the mandatory full credit check. This could lead to the opportunity to borrow larger sums of money and qualify for lower interest rates.
Similarly, if you want to maintain or improve your financial situation without burdening yourself with the responsibility of a long-term loan, a flexible short-term loan may work in your favour.
As long-term loans can stretch far into the future – often ten or twenty years ahead, in fact – be careful with them. Personal circumstances change all the time and what’s affordable now may be a burden in eight years’ time, for example.
Taking out a flexible short-term loan allows you to manage your finances and keep a final payment date in the foreseeable future.
Another benefit of short-term loans is their flexibility. They’re not only quickly accessed, but you can also pay off your loan off early, should you wish to.
If you happen to come into funds before the final payment date, you can get in touch with your lender to ask them to pay the balance off straight away. You’ll only be charged interest up until the date you settle your account, saving all the interest you would have paid if the loan lasted for the full term.
Using Moneypod as your short-term broker means you’ll get matched up with a lender who can offer you the best flexible short-term loan deal for your needs. We understand that everyone’s history is different and that’s why we and our lenders look at your situation as it stands right now, and not three years ago.
Short-term loans can be of real benefit to you just like they have been to millions of Brits: they’re efficient, immediate, and ultimately boost your credit rating when you pay them back on time.
If you feel confident that you would be able to pay back a short-term loan successfully, please click for our short-term loan application.