Short-term loans are powerful finance solutions

A short-term loan is a loan that needs to be paid back over a short period of time, usually in less than a year.

A short-term loan in New Zealand is the perfect temporary solution for financial problems and can be obtained fairly quickly through an online loan application.

You get different types of short-term loans for both personal and business use. As you need to repay the short-term loan relatively quickly the amount of money that you can borrow is usually less than is offered on a personal loan.

To apply for a short-term loan is very easy and the loan conditions are usually a lot less strict than a personal loan agreement. The cash can also be paid into your account very quickly, usually on the same day or the next day.

Fix temporary financial problems

A short-term loan is a perfect solution to fix temporary financial problems and pay for outstanding bills. Pay for doctor’s bills and medical expenses or help you out when you need some extra cash.

There aren’t many restrictions associated with a short-term loan and as long as you meet the basic requirements your loan application should be approved.

Instant loans and payday loans are types of short-term loans. A payday loan needs to be repaid by your next payday while other types may give you a few months to repay the loan. Short-term loans need to be repaid in under a year. A short-term loan can be secured or unsecured but is usually unsecured as the amount you can borrow is less.

Benefits of applying for a short-term loan

Short-term loans usually have a more competitive interest rate and are very convenient and easy to apply for. This type of loan gets you the money that you need without locking you into a long-term contract that traps you in a debt cycle that is very difficult to escape from.

Most banks offer short-term loans, however, the best place to find a short-term loan is online. There are very many online lenders that offer short-term or payday loans and you can apply from any device that has an internet connection.

There is no need to speak to a loan provider in person and there is no paperwork. In a few short clicks, your money will be making its way to you. If you need to supply any documentation you can simply upload it to the website site.

What is the difference between a short-term loan & a payday loan?

A payday loan offers a small amount of money and has to be repaid by your next payday in your pay cycle. Payday loans are debited automatically from your account. This makes payday loans less risky for lenders because your loan is secured by your next paycheque.

A short-term loan offers a larger amount and you have longer to repay your loan usually between 3 to 12 months. Both types of quick cash loans are more expensive than a personal loan. They are also less flexible than personal loans.

Why you should consider a short-term loan?

Short-term loans allow you to borrow between $200 and up to as much as $20,000 perfect for small expenses and paying bills. If you have good credit you can get very low interest rates. Those that have bad credit may still apply for what is known as a bad credit loan, but the interest rate that you are charged will depend on your risk profile so you might not qualify for some of the best-advertised deals.

Short-term loans are easy to obtain and only need to be repaid over 3 to 12 months, so you won’t have to be in debt for a very long period of time and these loans have same day payouts. Some disadvantages of short-term loans include paying a higher interest rate and you will only be able to borrow a small amount of money.

If you have bad credit you will be penalised by having to pay a much higher interest rate. If you miss payments or default on payments the penalty fees and charges are very high and your loan could end up costing you a lot of money. You could also try to apply for a peer-to-peer loan from a P2P lender as many of them offer short term loans online and some are wiling to take on.

What requirements do you need to apply for a short-term loan?

  • You need to be at least 18 years old
  • A citizen of New Zealand
  • A full-time job and a stable income
  • Proof that you can afford the loan payments
  • Provide a photo ID
  • 2 of your most recent payslips or a copy of your bank statement
  • An active account in your name that your salary is paid into each month

Short-term loans are perfect for those that have bad credit or that have their loan applications rejected from traditional banks, although the fees will be higher short-term loan providers are more likely to approve your online loan application as long as you can prove that you have a stable income and the ability to make loan repayments.

Compare loan providers

The best way to find the most suitable loan solution is to compare different lenders and their offers. The reason you are applying will also make a difference. Use a loan comparison website to compare deals side by side and find the one that best suits your options.

Applying for a short-term loan will not damage your credit score as the lender only takes a look at your credit history in order to determine your affordability.

The difference between short-term loans & long-term loans explained

The main difference between these two types of loans is the amount of time that you have in order to repay the loan. Long-term loans allow you to borrow a larger amount of money over a much longer period of time, usually a number of years.

If you need a large amount of money and you need longer to repay the loan than a long-term loan could be a better option for your requirements. You should only apply for as much money as you need to repay your debt the smaller the loan amount and the shorter period you are in debt for the better.

Make sure that you apply for such online loans in a responsible manner so that you don’t make your debt even worse.