Almost all of us will, at some point, find ourselves in a position where we require a small amount of additional money to cover a short term financial emergency or budget shortfall.
Short term loans, often known as payday loans, offer one solution to short term financial difficulties, allowing you to access small amounts of money quickly, and repay it on your next payday.
With the popularity of payday loans increasing, many lenders are now also offering short term instalment loans, such as three-month loans, allowing borrowers to take out small loans and repay in instalments over a three-month period.
A three-month loan offers a simple and immediate solution to a temporary or short-term financial problem, providing quick-fix financial assistance that’s repaid over the course of three months.
Lenders noticed that many people taking out payday loans struggled to pay it back in just one transaction, often resulting in them getting locked into a circle of debt. Three month loans are designed to make the process easier, by allowing borrowers to split the repayments over 3 months.
Just like traditional payday loans, the amount of time it takes for the funds from your three-month loan to appear in your bank account will depend upon your lender, however, they are often available instantly or within a matter of hours.
The main difference between a three-month loan and a payday loan is that a three-month loan is paid back in three equal monthly instalments, whereas a payday loan is usually paid back within a month in one instalment.
Both payday loans and three-month have higher rates of interest than traditional loans and financial products. However, because three-month loans are repaid over a longer period, they present a higher cost than payday loans, which are usually cleared within one month at the most.
Three-month loans are intended to be used to resolve a short-term cash flow issue or to purchase goods or services.
This type of loan can be used for almost anything, including home improvements, holidays, unexpected expenses, unusually high bills and more. If, for example, your boiler breaks down and needs to be replaced, a three-month loan will free up the cash you need to pay for the work fast, allowing you to repay it in three manageable amounts.
However, it’s important to remember that these loans should never be used to help manage existing debt.
3-month loans are not suitable for long term borrowing and should only be used as short-term measure. It is also important to remember that the longer a loan takes to be repaid, the more interest you will have to pay on that loan. This ultimately makes it more expensive than a shorter-term option.
All 3-month loans are subject to status, you must be over 18 years of age and be in employment to qualify for a three-month loan.