Short Term Loans

If you’re looking to immediately get access to funds and look forward to repaying them in a relatively short time frame, short term loans can come in handy for that purpose. Whether you need the cash because for an unexpected expense or other reasons, a short term loan can help with that precise shortfall.

 

What further makes these loans attractive is that they’re easy to obtain and can mostly be applied for online. And the cherry on top is that you can sometimes even receive the funds on the same day you get the approval! Could it get better?

 

Without further ado, let’s get into the details of payday loans online Australia!

What Are Short Term Loans?

Short term loans, also known as short term money fast no credit check loans for unemployed, payday loans, short cash loans, or personal loan for low income earners, are small personal loans meant to be repaid in the shortest possible periods to help you cover unexpected or emergency expenses. 

In most cases, a short term personal loan’s amount is up to $2000, and you can repay the amount in a few months. As for fees, the loan’s principal amount is accompanied by an establishment fee along with monthly fees, depending on the lender or best bank loans

 

short term loan

Speaking of repayment, its frequency is quite flexible; you can pay instalments weekly, fortnightly, or monthly, depending on your pay cycle. That’s actually one of the most significant advantages of small short term types of loans since the repayments tend to be small as well, so you won’t feel the burden of the loan at all.

Some of the reasons people seek bad credit personal loans guaranteed approval no bank account include:

  • Car repairs
  • Unexpected boat expenses
  • Forgotten bills or payments
  • Emergencies
  • Covering expenses until payday
  • Surprise purchases during travelling
  • Home repairs (as a result of storms, for example)

What’s the Eligibility Criteria for a Short Term Loan?

While the eligibility criteria differences from one lender to another, here are the general criteria for the most popular short term loans:

  • You must be over 18 years old
  • You must have an internet banking account
  • You must have a stable source of income and present proof of it
  • If you’re on Centrelink and it contributes to more than 50% of your income, your repayments can’t exceed 10% of that income
  • If you’re on Centrelink and it contributes to less than 50% of your income, your repayments can’t exceed 20% of that income
  • If you have a bad credit score, you’ll need to provide your financial stability and capability to repay the loan
  • You must have a valid email address and provide contact information

How Much Do Short Term Cash Loans in Australia Cost?

best short term loans australia

Short term loans are higher in cost than a traditional guarantor loan, but the bright side is that the short term loans Australia has to offer are very governed by the government. That means that lenders are restricted when it comes to the charges they can impose and the fees they can charge.

For that reason, with loans under $2000, lenders can’t charge you more than 20% of the principal amount as an establishment fee and a 4% monthly fee. Late fees and enforcement expenses are where there’s room for flexibility, but the best short term loans more or less have the same ranges. 

Do note, though, that the fee structure can vary according to the amount of the mini loan. Also, contrary to popular belief, it’s not impossible to find low-interest short term loans; just search around and compare the best short term loans Australia has to offer.

What Are the Risks of Short Term Cash Loans Australia Offers?

short term personal loan

As we’ve discussed, short-term loans can be quite expensive, depending on the amount you borrow and, of course, the charges that the lender chooses to impose. So, as you search for short term loans online and send in your applications, here are some risks you need to be wary of:

  • Loan amount: It can be tempting to take out a loan of an amount that’s worth more than what you actually need. Remember that the higher the loan amount, the higher the repayments and fees, so resist the temptation.
  • Fees and charges: As we’ve discussed, any short term loan Australia lender is restricted when it comes to how much it can charge in terms of fees. Here are the exact regulated fees.
  • Low-grade lenders: Unfortunately, the industry is a magnet for many lenders, and not all of them are equally reputable. If an offer seems too good to be true, it probably isn’t true – in most cases, they’ll probably be breaking the law in one way or another.
  • Loan agreement: Once you sign the loan agreement, you’re bound to its conditions. Therefore, please read it thoroughly and pay attention to any fine prints. If you don’t abide by the conditions, the lender has the full right to take you to court.

Frequently Asked Questions:

How Long Is a Short Term Loan?

The repayment period for a short term loan can be anywhere between 16 days and a year, but the typical period is a couple of months. Short-term online loans are also supported with calculators that enable you to play around with repayment periods and inform you of how much the total overnight borrowing rate cost will be based on the period and the loan fees.

Do I Need to Provide Collateral?

No, most quick short term loans for senior citizens are an instant unsecured loan, meaning that they don’t require assets or collateral to secure the loan. However, if you want to put up collateral, some online short term loan lenders will accept that. But keep in mind that you could lose your asset in the process if you default on the loan for any reason.

Could I Use a Short Term Loan as a Deposit for Another Form of Financing?

There’s nothing that prohibits you from doing that. In fact, many borrowers use their short term loan amounts to deposit a new car financed by a bank, for example. Yet, we’d advise you to consult a financial planner before pursuing this option, just in case any risks are involved.

Do You Really Need a Short Loan?

short term loans australia

It’s worth mentioning that while you may not feel the loan burden at large, the reality is it can be expensive to borrow relatively small amounts of money. That’s mainly because most short loans are unsecured, not requiring collateral in exchange for the loan, which increases the risk for lenders.

Since the risk is high, lenders safeguard themselves against the possibilities of you defaulting on the loan through high interest rates along with charges and fees, which can make the total loan amount not so small after all. 

Accordingly, it’s always a good idea to check your options before seeking a short term cash loan. Some of those options could include borrowing the needed amount from friends or family, asking to receive an advance from Centrelink if you’re on government benefits, or talking with electricity, phone, water, and gas providers to negotiate the possibility of a payment plan.

Also, don’t forget that Australia’s MoneySmart website can provide you with financial counselling services and help you manage your money better and suggest financial support options and alternatives. Even if you decide to go with fast short term loans, the website can inform you better on how they work. 

Final Words

Short term loans can be an optimal solution for tight financial situations and sudden costs that must be repaid immediately, but just like any other loan type, they come with their own risks. Therefore, it’s best to make short term loans your final resort and consider your alternatives first.

If that’s the only solution, don’t borrow more than you can repay and resist the temptations. Moreover, establish a detailed repayment schedule to make sure you can repay the full amount on time to avoid harming your credit score.

And as a final reminder, remember that the Australian Securities & Investments Commission regulates banks to ensure they don’t mislead you or give you loans you can’t pay back, so don’t make sure to acquaint yourself with all the regulations! Specifically, with short term loans, a lot of lenders can make promises that are just too good to be true, so steer away from those.

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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