A short term loan is a quick loan that one takes and pays back in a very short space of time. They are usually not as complex as ordinary loans. And the requirements to qualify are more lenient compared to other loans. Most providers of this type of loan are small to medium micro lenders.
A person may go and take out a loan and pay it a week later or take a loan and pay it after one month. Usually these types of loans have a short repayment period and don’t have recurring monthly instalments. It is equivalent to a cash advance. This is the type of loan one uses if they run short of something like an important thing in the household or their car breaks down just a week before pay day. It is usually a small amount of money and does not often exceed R5 000. The applicant decides on how much they want and when they wish to repay it.
With most lenders, when they approve this loan, the money is available instantly if not within 24 hours. This is because this loan amount is small and is for a very short duration. In most cases, the lender ignores many factors such as affordability and other crucial stuff and this is where people must be careful. They must understand and accept all the terms and conditions of the loan.
The benefits of this type of loan, is that it is less complex and comes in handy when one just requires a small amount of money. No monthly headaches as you payback everything you took at once. This reduces the chances of being listed negatively on various credit databases.
An applicant who earns fortnightly can take this loan to add to their income for that week, maybe because they have greater demands at that time and quickly repay the loan two weeks later. It is the quickest and easiest forms of cash available out there. Interest rates may vary with the lender but the difference varies slightly from one micro lender to the next.