Despite all the bad press short term loans have been getting as of late, industry experts say that short term loans such as these are excellent for those households keeping strict budgets due to adverse economic conditions.
Instant cash loans, or short term loans, are a recent import from across the pond, where households in the US have had access to them for many a year. The way these loans work is that you can gain access to as little as £100 or as much as £1,000 – and sometimes more, depending on the provider – for a short period of time, then pay back the loan once you receive your next pay cheque.
Payday loans have gone become increasingly easy to apply for over the past few months, as no longer do applicants need to comb through multiple payday advance providers. Instead, many loan websites will apply to as many as 30 providers from one single application, much like an insurance comparison site would for its customers.
Many members of the media have had harsh words for the high interest rates that accompany short term loans. However, the annual percentage rates advertised on these loans, which are a regulatory requirement, are calculated based on the kind longer term loans you would take out from a traditional lender, and are a poor fit in representing the actual costs of repaying these short term loans.
Calling the repayment cost of a short term loan ‘interest’ is a bit of a misnomer – as most lenders refer to them as fees, which scale according to the amount you borrow from them. With the average borrower only taking out a loan for anywhere between 20 to 30 days, costs are usually less than it would cost a borrower to pay the fees associated with an unauthorised overdraft for the same amount.