You’ve looked for loans with no guarantor and have found a short-term loan that appears suitable for your needs, but, is it really as simple as it appears to be? Well, in all honesty, short-term loans can be some of the most appealing borrowing routes available, but they offer some drawbacks. Despite what you might think, short-term loans have their problems and the repercussions can be long-term. So, what are the long-term consequences of a short-term loan? Check here!
Credit Is Affected
One of the worst consequences of getting a short-term loan is the fact that your credit can be ruined by a simple loan. For example, you get a payday loan, you get a few hundred dollars and plan to repay the loan within the upcoming three weeks; but, if you default you’re going to cause damage to your credit. What is more, even if you do pay the loan back, you may still find your credit is impacted by the short-term loan. That’s why long-term loans might be more suited to your specific needs.
Higher Interest Rates
Another consequence of a short-term loan may be interest rates. Now, if you were to get a short-term loan, you might have interest of over a 100%, if not, much more. However, what was once a three hundred dollar loan, the overall costs could end up finishing in the thousands. Why is that? Interest rates can cost so much that it can interest the overall amount you have to pay back to the lender. For some borrowers, they aren’t able to afford the costs and what was supposed to be a short-term loan quickly turns into a long-term loan. Even loans with no guarantor can turn into a long-term loan you didn’t plan for.
Late Fees and Penalties
Let’s say you borrow money and you think you’re going to finish making repayments within six months, but, what if you miss a payment? What if you pay the loan back early? In all honesty, the lender can charge a high late fee along with penalties that really increase the overall loan amount. Short-term loans can cost far more, even though you’re paying it back within a short period of time. That’s why long-term loans can be slightly better. It’s something you might want to consider when borrowing money. Late fees can add hundreds more onto a loan and loan fees can often be higher with short-term loans. That’s a major problem to say the least and sometimes short-term loans don’t always work out perfectly.
Think Of the Consequences before Taking out a Loan
Short-term loans can be fantastic for those who don’t want the long-term commitment of a long-term loan, but while they offer a lot of positives, they also have their negatives. What is more, there are a lot of long-term consequences of getting a short-term loan that last for years. You have to think very carefully about taking out a short-term loan and ensure you know all long-term consequences. Even when you’re getting loans with no guarantor know the long-term risks. Check out this site: https://ezinearticles.com/?How-You-Should-Process-Your-Short-Term-Loans&id=9498847