6 things to keep mind before applying for Short Term Loans or Payday Loans

6 things to keep mind before applying for Short Term Loans/Payday Loans.

Short term loan or payday loan are very useful to cover small but pressing financial needs. Be it a phone bill, an expensive dinner date or an impromptu trip to Goa, such loans are the perfect financial solution. So if you ever find yourself in a fix financially, opting for such a loan is a good idea. However, before you sign anything and make any concrete decisions, remember to keep these points in mind.

1. Instant online approvals.

Try looking for a finance solution that provides smooth, snappy solutions. This way you can skip branch visits, paperwork, complex paperwork and nerve rackingly awaiting approvals. Some next-generation lenders even have an app through which you apply, submit your documents and get approvals within minutes with direct transfers directly into your account.

2. Void of hidden costs.

The lender you go with should disclose all costs and expenses applicable upfront and transparently. If possible, ask for a complete break-up of your repayment amount. Confirm the final amount payable after interest, applicable taxes, processing fees, stamp duty, etc.

3. Low APR Short Term Loans/Payday Loans.

Look for loan offerings that come with the lowest price tag and when we say price tag we mean interest rate. Generally speaking, an APR between 24% and 30% is decent rate. This translates into 2 to 2.5 percent per month. On a loan amount of Rs. 10,000, this rate would work-up a total interest amount of Rs. 435 after 51-day repayment plan. 

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4. Data protection.

When you apply for short term loans or payday loans, you provide the lender a good amount of information about yourself - even more so if you opt to borrow through an app that will require access to numerous elements on your phone. So, confirm that your information will remain private and enquire if they will terminate all your information after your loan repayment is complete or if you decide to delete the app.

5. Fewer details.

Some lenders will require a long list of documents where as some will request you furnish as little as 5 documents (address proof, your pan card, your Aadhar card, your photograph and bank statements). Moreover, some lenders will even forego the need for a credit score and provide you a loan based on your social worth.

6. 0 prepayment charges.

Prepaying short term loans or payday loans is always a smart decision. It reduces the total interest payable and ensures you get the burden of a loan off your back. However, some lenders will only provide you this option of prepayment at a cost - this defeat the purpose of prepaying. Fortunately, there are some lenders who do not levy prepayment charges on your loan and so it makes sense to look for such lenders.

Keeping these 6 things in mind when looking for short term loans or payday loans should ensure you get the right financial solutions from the right lender. We hope this article has been helpful, good luck and all the best!