Short term loans and how to ensure they are affordable

Short term loans enable an ability to borrow a small sum of money over a pre-agreed period of repayment. Often and depending on the lender, there will be a number of different repayment terms to make a selection from when you are applying for the loan. Short term loans are very different to larger and more ‘main stream’ forms of borrowing, given the loan values being considered are considerably smaller by comparison. Although a short term loans lender may consider an application for £300.00 and a bank may consider a much larger loan, say for £3000.00, in either case, ensuring you can afford the repayments is very important. Often we are more aware and more considerate of the costs associated to larger financial commitments because the terms of repayment are generally longer and therefore require a high level of financial planning. That said, ignoring the requirement to plan financially for short term borrowing will never be a sensible choice to make either. In fact, like a bank loan or Hire Purchase agreement, short term borrowing requires accurate and detailed planning in advance of an agreement also.

Planning for a short term loans resource means understanding and being fully aware of what your financial restrictions and therefore limitations are. This is because understanding these will help ensure the loan you decide upon, is not too expensive and therefore unaffordable as a result. In order to truly understand your own individual financial limitations, it would be sensible to complete and review your budget, before applying for short term loans. A budget is an incredibly simple resource which enables you to understand exactly what you have coming in and going out during the period between one pay date and the next. To complete a budget it only requires the effort of listing all of expenses, which occur regularly, alongside your known and total income. This means accounting for not only your living costs, such as rent and bills but also any other costs you pay each month including travel and food for example. Of course it is also important to include costs relating to existing credit based commitments. By deducting your total costs from your total income, this simple sum will produce a figure which is your spare income and therefore indicates your financial limitation.

Borrowing whether it be via short term loans or otherwise, without taking into account your financial limitation will undoubtedly cause repayment issues. This is why understanding and then working inside your financial limitations is a much more suitable option. Say for example from completing your budget you understand that you normally have a sum of £300.00 as spare income. When deciding upon which of the short term loans available is most suitable for you, the amount must not exceed this £300.00 sum. Equally it would be fair to say that committing to a repayment of £300.00 exactly will likely cause issues also as this would result in absolutely no remaining disposable or spare income available to spend elsewhere during the course of the month.