If you’ve recently run into an emergency expense and you’re looking for funding options that will help you cover it, you might be wondering if a short-term loan is worthwhile. Of course, with so many borrowing options to consider, a short-term loan can often seem like a last resort because it is well-known that they carry higher interest rates. However, in exchange for that extra cost, they also provide the convenience of fast and simple approval. With that said, here are the four reasons why short-term loans are actually worth your consideration when you’re in need of emergency funding:
The first reason why short-term loans are often perfect for emergencies is that you don’t have to leave your house or interrupt your schedule to apply for one. You can usually obtain a short-term online loan from Loan Pig USA just by providing basic details about who you are and what you do for a living. With simple proof of income and identification, you could borrow hundreds or even thousands of dollars and receive the funds in your bank account within 1-2 business days.
Opting for a long-term loan might seem like a wiser option because your monthly payments and interest charges will be lower, but it will also put you at the disadvantage of having to make payments for many months or years on end. Of course, all it takes is a couple of late payments to send the cycle of debt into a spiral and negatively affect your credit score, so you’re putting yourself at risk of financial trouble for much longer than you would be if you were to simply take out a short-term loan and then repay it within a month or two.
Of course, adding to any existing debts that you may have is never an ideal scenario, and that’s exactly what you’re committing to when you take out a long-term loan. With a short-term loan, your total debt amount only goes up for a brief period of time, assuming you repay the loan within the designated time frame, which usually ranges from two weeks to 90 days. Regardless, you won’t be stuck with a heightened debt load for more than a few months, which can be more appealing than the alternative of being stuck under a monthly payment for 1-5 years with a long-term loan.
Finally, another reason why a short-term loan is a worthwhile consideration for emergency funding is that most applicants will be able to gain approval within just a couple of minutes to a couple of hours. Of course, when you’re facing an emergency need, you don’t have the time or patience to deal with uncertain processes that may or may not pay off --- you need something that is definitely going to work. Short-term loans provide that assurance because most lenders will only need to see your identification, proof of income, and bank routing information to facilitate your approval on a same-day basis.
Many long-term lenders have launched marketing and PR campaigns to smear the legitimacy and usability of short-term lending services. After all, why would they want their potential borrowers going to short-term lenders and avoiding their long-term debt traps altogether? Don’t buy into the hype when it comes to making your comparison between short-term and long-term loans. Instead, take the above points into consideration and use your own discretion.