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As hard as we may try, sometimes we come up short with the cash needed to cover certain expenses. That’s where loans can prove to be highly convenient. And while some needs are long-term in nature, others are more short term.
For instance, a mortgage typically requires a long term type of loan, while something that’s just a few hundred dollars in cost might only take a few months to pay off. In terms of the latter, a short term loan in Saint John might really come in handy.
Check out this article for more information about loans in Saint John.
What is a Short Term Loan?
As the name suggests, a short term loan is a type of loan that is repaid in full in a short period of time – usually within one or two years. The loan amounts associated with short term loans are usually for a few hundred dollars (sometimes up to a thousand dollars). These are in contrast to long term loans which typically last for years and are usually made for much larger loan amounts.
More interested in a long term loan in Canada? Read this first.
Short Term Loans Vs. Payday Loans
Based on the description of short term loans just mentioned, many might wonder how these types of loans differ from payday loans. They may have some similarities, such as short term durations and lower loan amounts, but they also have their differences:
Number of payments. The biggest difference between a short term loan and a payday loan is the number of payments that would have to be made to repay the loan amount. Short term loans in Saint John, on the other hand, allow for installments to be made towards repaying the loan.
Time frame to repay the loan. A payday loan usually needs to be paid back when the next paycheck comes in, typically two weeks after the loan was taken out. Short term loans, though short in duration, usually allow a few months up to a year to be repaid.
Interest rate. Although short term loans usually come with interest rates that are much higher than those of long term loans, they’re still typically less than payday loans.
Approval process. Payday loans are typically very easy to get approved for. In fact, payday lenders rarely ask for much more than an income statement, whereas traditional short term lenders usually want to see more documentation, including credit scores and statements of income.
To learn more about the true cost of borrowing, click here.
How To Get Approved For a Short Term Loan in Saint John
Getting approved for a short term loan in Saint John is unlike the approval process for any other type of loan. In order to get approved, you’ll need to do the following:
Pull your credit report – If you want to know what the state of your credit is right now, you’ll find all the pertinent information in your credit report. You can obtain a copy of your credit report from either Equifax or TransUnion. This will not only tell you what your credit score is but what is affecting it.
Wondering which credit bureau your lender checks? Find out here.
Report any errors – Once you have a copy of your credit report, review it carefully to make sure there aren’t any errors in it. If there are, make sure to report them right away, as they could be pulling your credit score down. Your credit score is an extremely important factor when it comes to getting approved for any type of loan, so you’ll want to make sure it’s as high as it can be.
Take steps to improve your credit score – Lenders in Saint John usually like to see a credit score of at least 650 to 680. If yours is lower than that, take steps to improve it. You can do this by making sure to pay all your bills on time, being frugal with your credit card, and not applying for too many loans or credit cards within a short period of time.
Shop around for the right lender – Every lender in Saint John will have their own types of short term loan products with different interest rates and terms. Be sure to shop around from one lender to the next to compare products and choose one that’s best suited for you.
Read this so you’ll have an easier time comparing lenders in Canada.
Pay down your credit card debt – If you have a lot of credit card debt, be vigilant about paying it down. Credit card debt tends to come with very high-interest rates, so any outstanding balance that you have will become increasingly difficult to pay down if it’s too high. And too much debt could make you less likely to be eligible to secure a short term loan.
Create a budget – In order to keep up with your payments, creating a budget is crucial, especially when you’re adding another loan payment into the mix.
What Can I Use My Short Term Loan For in Saint John?
Truthfully, you can literally apply the funds obtained through a short-term loan for just about anything in Saint John. Here are just a few examples:
- To cover the cost of an emergency
- To pay for unexpected travel
- To make a large purchase
- To go on vacation
- To make home improvements
- To pay for car repairs
- To build credit
There are so many things that you can use a short term loan for that the options are seemingly endless.
What is a credit builder account? Look here for the answer.
What We Recommend a Short Term Loan For
While you can certainly use a short term loan for a variety of things in Saint John, your best bet is to make sure you’re applying the money toward something that you truly need or something that will bring you added value.
For example, car repairs are necessary and aren’t expenditures that are frivolous. In addition, a home improvement project that can effectively increase the value for your home is also money well spent. We don’t encourage short term loans to be taken out for any type of purchase without taking your finances into consideration first.
What is the interest rate?
The annual percentage interest rate (APR) for a short term loan in Saint John will vary among lenders. That said, the rates are typically higher among non-traditional lenders than conventional lenders and loan products.
Can approval be guaranteed?
There are some lenders in Saint John who will advertise that they “guarantee” approval for their short term loan products. However, these lenders should be avoided, as they are usually predatory in nature. These types of lenders usually provide loans to borrowers who don’t have the capability of repaying the loan amount, especially at sky-high interest rates.
No respectable lender can guarantee loan approval without having first looked at all pertinent financial and credit information of the borrower.
This is how you can make it easier to guarantee your personal loan approval.
What fees come with short-term loans in Saint John?
Most loan products in Saint John have some sort of fees that are paid by the borrower. You’ll want to find out what these are before you agree to take one out. Like interest rates, fees associated with short term loans in Saint John will vary.
You should be informed of what these fees are before you sign on the dotted line. You’ll also want to find out what the fees are if you miss payments.
Check out this infographic to learn about your credit score.
Pros and Cons of Short Term Loans
There are plenty of positive things about short-term loans, including the following:
- Quick loan approval
- Quick access to approved funds
- Minimal background checks
- Minimal or no collateral required
At the same time, there are also a few drawbacks to short-term loans that you should be wary of:
- High-interest rates
- Lower loan amounts compared to long-term loans
- Risk of losing collateral (for secured short-term loans)
- Predatory lenders to look out for
Look at this if you need debt relief from predatory loans.
Need a Loan?
There are all sorts of different loan options available in Saint John, including short term loans. Likewise, there are plenty of different reasons why loans are sought after. If you’re in need of a loan, be sure to carefully assess your finances to make sure you’re equipped to make loan payments. Once you’ve done that, get in touch with Loans Canada and we’ll put you in touch with the right lender who will provide you with the appropriate product you need.
