Is a short-term loan right for you? These kinds of loans have some definite benefits: the application process is quick and easy, you typically don’t need collateral, and if you pay it off on time it can boost your credit rating significantly. But such loans can also have drawbacks: they typically have higher interest and if you can’t pay the loan back it can send your credit rating through the floor.
Here are 5 cases where a short-term loan might fit your needs:
1) Career Development—Programs, certifications, and schooling that enable you to learn new skills can pay dividends in your career. But these programs can cost several thousand dollars. If you don’t have that money in the bank, a temporary loan can empower you to enroll in the program and give your career a boost.
2) Car Repairs—Like home repairs, car problems can be expensive. If your engine fails, you can be stranded without transportation unless you pay thousands of dollars to repair it. A short-term loan, with a fast application and approval process, can help you fix this problem in days.
3) Business Development—If your business is having cash-flow problems, or you need to expand quickly, a short-term loan might be the answer. This can give you the financial flexibility to expand your business or just keep it running. Beware, though. These kinds of loans should only be used to plug temporary holes in your business’ finances, not to try to supplement your monthly revenue.
4) Building Credit—Because short-term loans are high risk, paying them back on time can boost your credit rating significantly. And because you pay them off quickly, this benefit takes effect fast. Many people take out a short-term loan a year or two before getting a mortgage. The boost to their credit, which translates into favorable mortgage terms, more than balances out the high interest rates of the loan.
5) Home Repairs—If you have a pressing problem in your home, like ruined pipes or a leaking roof, fixing it can be expensive. A short-term loan can provide the money quickly and help you get your home repaired in as short a time as possible.
Finally, there’s one big reason not to take out this kind of loan: if you’re already in debt and need it to cover bills. In this case a loan might seem like the answer, but you’ll just be piling high interest on top of your current bills, compounding the problem.
If you think a short-term loan might be a good fit, call (303)458-6660 to learn more. We are currently offering the annual RMLEFCU holiday loan where you can borrow up to $2500, take up to 12 months to repay, and get rates as low as 7.95% APR*.
*Annual Percentage Rate. With approved credit. Some restrictions may apply. Offer valid through December 31, 2014. Offer details subject to change.