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Considering A Short-Term Emergency Loan? Here's What To Look Out For

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Sep. 19 2022, Published 8:00 a.m. ET

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While it’s always a good idea to have some savings tucked away for emergencies, we can’t always guarantee that this is going to be the case for us when a disaster strikes and money is needed quickly.

Whether you’ve already used your savings on the last thing and haven’t had the chance to build them back up again, or you’re in a financial pinch at the moment and aren’t managing to save as much money as you would like, sometimes borrowing money might be the best option if you need access to quick cash.

There is certainly no shortage of products on the market offering instant, easy loans that you can repay over time, but it’s important to be careful when borrowing, in order to ensure that you can make repayments while avoiding further financial trouble.

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When applying for short-term cash and instant loans online, it can be tempting to take the maximum amount that is available to you. Sure, you might only need $100 to get your washing machine fixed, but if you can borrow $500 and have it in your bank today, it can be tempting to go for it especially if you are already thinking about everything you could do with that money. However, it’s important to remember that this is money that you will need to repay, so the more you borrow, the more you’ll be paying back.

Most responsible short-term lenders today will provide you with some further information on how much you can expect to repay to your loan each week or month when you apply, giving you the chance to determine if it’s going to fit into your budget before you accept the offer and get access to the cash. Never take out a loan if you don’t know how much you’ll be required to repay each month. Once you have a repayment figure, go through your budget to make sure that this is something you can afford to repay without putting yourself in financial trouble.

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Finally, before you apply for a short-term or instant loan, it’s a good idea to do some further research into the lender and make sure that they are a reputable option to go with. Some lenders use unscrupulous tactics such as charging extremely high fees or over-lending money to people who can’t afford to pay it back, without doing the proper affordability checks. While steps like doing an expenditure form or sending a copy of your payslip might be annoying at the time, these are all signs that your lender is being responsible.

Finally, it’s worth going over any alternative options that might be available to you before you borrow. Borrowing from friends and family or getting help from a charitable organization might be worth considering instead. If you need to borrow money for a replacement or repair of an object, it’s also worth checking if it is covered by your insurance.

While it’s easier than ever today to get short-term cash in your bank account within minutes online, there are lots of things to consider before you apply for and accept a loan.

This article was written by Sophia Anderson and originally appeared on Your Coffee Break.

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