Short term loans are all the rage at the moment, with payday loans, car title loans and similar methods of finance being at the peak of popularity. Gone are the days when one had to queue at the bank before waiting weeks for a decision – such timeframes have now been cut down to a day or less.

However, that’s not to say that all methods of short term finance are perfect for everyone. In fact, some people should stay away from them at all costs. These people are usually the ones who end up as feature stories in the regional newspapers, who just happen to lap up any negative anecdotes regarding short term finance. In other words, it’s a finance option that the media simply love to hate and if you do enough Googling, you’ll find plenty of evidence of this.

Rather than try and defend all of the short terms loans that are out there, we’ll instead take a different approach. The reason they forge such a poor reputation is because of unsuitable candidates applying for them and bearing this in mind, we’ll now go through some of the questions you should ask yourself before taking out this finance.

Short-term loans

Do you require the cash for an emergency?

First and foremost, most lenders make no secret about the fact that their finance is purely for short-term reasons. Therefore, this means that the most common use for a payday or an auto title loan is for an emergency. If you happen to require cash in a matter of days, for something like a broken down vehicle which is required for work, or a broken boiler in the middle of winter, a short term finance option seems perfect.

However, for anything else, you should be asking questions. The drawback of obtaining the cash so quickly is that you will pay higher rates of interest, so ask yourself whether this conundrum really is worthwhile.

Do you live a “profitable” life?

This second point is probably even more important. Before even applying for a loan of this type, ask yourself if you live a profitable life. In other words, are you breaking even each month, or making enough to put a small amount away in savings?

If you’re not doing either, on a constant basis, there’s a very good chance your making a loss. Therefore, a short term loan is only going to add to your debt and while it may solve some immediate problems with creditors, over time the situation is just going to compound itself. In other words, it’s not an easy way out – you need to seriously analyse your finances.

Why have you resorted to this method of finance?

Finally, and this revolves around the first question we asked in some regards – why have you resorted to this method of finance? If it’s because you’ve been turned down by other avenues, it’s time to keep digging and ask yourself why. If your credit rating is so poor, it’s time to ask yourself whether you’re really in a position to take out such an interest-heavy loan, or whether or not there are other options open to you.

In summary, it’s all about being brutally honest with yourself. If you can, hand-on-heart, say that you are suitable for a short term loan, then you are part of the group that they can be enormously beneficial and useful to.

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