How Short Term Loans Might be Able to Help

Short term loans are a form of borrowing which has been available for some time now, in fact, what many of us will, not be aware of is the fact that short term loans have now been available for over a decade. It’s difficult to believe that in fact the ability to borrow a small sum of money online has become a very much established form of consumer borrowing. Before online loans were available consumers did not have many choices for borrowing, as far as small loans were concerned. In fact, those looking to borrow such sums would have had to turn to either high street lenders; such as those which allow an exchange of goods for cash or their existing bank for an overdraft facility. Where these resources were available, they were not always the type of borrowing ideally suited to the needs of consumers who were using them. When the short term loans were introduced, consumers suddenly had small time borrowing at their fingertips.

When they were first introduced short term loans were aiming to be clear to understand and therefore came with the offering of a very simple repayment term. They were given the name payday loans and this is because the loans on offer allowed consumers to do just that; borrow until their next pay date. The loans which were on offer generally ranged from as little as £50.00 and no more than £500.00, with most customers borrowing between £200.00 and £300.00. Regardless of when the application was submitted, in the majority of cases, the loan would be agreed to be repaid in full on the customers next pay date. There were some exceptions to this rule, for those who applied only a few days before this date. For anyone else the loan would be repaid on the pay date, whether this was 10 days or 25 days in the future. So effectively short term loans in their original form were able to provide a quick financial fix and were never designed to be a long term borrowing resource.

Although for many years short term loans were able to exist successfully in the payday loan format, over time it became clear this would not always be the case. The reality was as consumers became increasingly used to small term borrowing, thanks not only to short term loans but other small term borrowing choices becoming increasingly more popular and as such, lump sum repayments became a less suitable choice for borrowers. The increase in the availability of store cards, home lending and even internet shopping choices meant that over the years the way in which consumers manage their purchases and therefore potential borrowing; changed, making the payday loan a somewhat dated resource. Fundamentally the payday loan did not offer enough flexibility which meant consumers continued to face large payments if they wanted to use the resource of a small loan.

As time has continued to pass short term loans and their lenders have evolved in terms of the product being offered. Whilst it had long become clear that small scale borrowing was here to say, the repayment terms which went along with them certainly needed being up to date and in line with modern day consumer spending habits. As such short term loans evolved into an installment based borrowing resource. So where the fundamentals of the product offering remained the same; small loans over a relatively short period of repayment, the lenders changed to allow monthly installments to be given as possible repayment options. Whether this is 2 months or 12 months, in today’s market, the modern day short term loans offer choice. It would certainly seem true to say that the option to repay credit based agreements in smaller monthly installments is a popular choice among st borrowers. This is because nowadays installment based short term loans are quickly becoming the option which is most regularly chosen by consumers. Instead of taking up the payday loan option where the loan must be repaid in full on a future date, these installment loans give the opportunity to control the repayment amount due monthly, depending on the term of repayment selected when the loan is taken. It would appear then as time continues to pass that short term loans are continuing to facilitate consumers looking to borrow on a small scale basis.