Short-term financing is generally criticized because it comes with high interest rates. However, it is often the only solution to get out of an emergency situation and avoid worsening your finances and consequently your credit rating. Here are the main advantages of short-term financing.
A WAY TO DEAL WITH EMERGENCY
When you have bad credit and have to pay a huge energy bill, car repairs, health costs or credit maturities, short-term financing is usually the only one. accessible solution. Of course, this type of loan comes with significant interest, but it does not make the situation worse by avoiding:
Deprivation of his means of transport to go to work
The worsening of a medical condition requiring treatment
Non-payment of credit or card installments
Payments of penalties and fees that result from an unpaid item or a default
AN ACCESSIBLE LOAN WITHOUT A CREDIT INQUIRY
Another positive aspect of short term financing is that it is available to people with bad credit, even those who do not own their home. Indeed, if traditional banking institutions refuse to grant a loan to borrowers with a low credit rating, private brokers and lenders can grant them loans provided they demonstrate a stable situation and their capacity. to keep this new commitment. In addition to making it possible to deal with emergencies, this type of loan can also be used to finance repairs to your apartment or house, the purchase of a new vehicle, studies or even vacations, without having to to provide no proof.
A QUICK REFUND
With short-term loans, debts are paid off quickly, which allows, although interest rates are high, to pay as little interest as possible. It also means that once the loan is cleared, the person with a bad credit score has the opportunity to start rebuilding their credit immediately. On the one hand, she must review her budget by focusing, for example, on limiting her debts, including mortgage and car loan, to 30% of her income, avoiding applying for new loans and limiting the use of her credit card to a third or even half of the authorized ceiling so that it only produces a beneficial effect and allows it to regain points on its rating. To accelerate the increase in her score, she can simultaneously apply for a personal loan, a line of credit or a credit card with a security deposit and only use it within the limit of 30 to 50% of the maximum authorized. Used seriously, the guaranteed card can generally be replaced by a classic credit card which in turn allows you to continue to improve your score, provided you always pay your bills on time and only use it up to the limit. half of the ceiling.
Short-term financing is not for all needs. On the other hand, it is the ideal solution when there is an urgent need for money and often the only option for people with a bad rating. In addition, as it is repaid quickly, not only is its interest limited, but in addition, once paid, it allows you to start rebuilding your credit in the long term.