Timing is Everything: 5 ways in which timing could affect your short term loan

| June 22, 2012

Receiving loans can be a lifeline for people of all incomes and for all purposes. Whether it is a loan you take out to make ends meet, to make a savvy investment or even just to treat yourself in advance of a pay cheque, loans can be a great help when sought in the right circumstances.

What sets short term loans apart from longer term, bank loans is their ease and speed. Receiving a loan from a bank can be a long and arduous process which can often see the purpose of your loan flash past before you while you are sat in the bank foyer drowning in hoards of dull paperwork.

Timing is everything when it comes to receiving a loan, for the following five reasons.

1. Interest rates

Interest rates vary dramatically across different types of loan. Whatever you are taking out a loan for, the interest rate is something which should have a considerable impact on the decision you reach regarding which type of loan to go for.

High interest rate loans can offer advantages in terms of the size and speed of the money you receive but should be considered very carefully. If you have a system in place which allows you to make a repayment within a short amount of time then this is the loan which could work best for you.

2. Safe judgements

Whichever sort of loan you are looking at taking out, you will need to make a judgement about your ability to pay the loan back. Perhaps you are taking out a loan to make an investment. If this is the case, you will need to take into account the nature of short term loans before deciding whether this is the best option for funding your investment.

Try to decide whether or not the terms of the investment suit the terms of the loan. If you are unable to receive a return on your investment before you have to start repaying the loan, this is unlikely to be a wise option for you.

3. Repayments

Whatever you are borrowing the money for, you need to think carefully about how the loan is going to be repaid. The terms of repayment are likely to state a time period over which the money should be returned, as well as an interest rate. For Example; you own a small trucking company with small start up costs you can take out a freight factoring loan to pay for fuel , permits, payroll and other expenses. The two will inevitably be linked to one another. This information is key to understanding whether a particular loan is right for you.

4. Future finances

Loans need to be justifiable. That is to say, you should have some understanding of how you expect to repay the loan in the future. This is the first thing which you should allow to determine the timing of the loan.

If you can recognise a time in the near future when you will have sufficient income to consider making payments on your loan, then a loan could well be a sensible option.

5. Investments

Some people use short term loans to fund investments. The nature of investments dictates that you need to act quickly, which means you need to have available funds. If you can recognise a strong investment but do not have the money at your disposal at a given time, short term loans are a viable means of funding that investment.

Category: Payday Loan

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