Pitfalls of Short Term Loans Around the Holidays

The holiday season is the time when people go shopping and spend a lot of money. Even though it is fun to spend money in Christmas season, you should not have to get a short term loan to pay for your shopping expenses. Getting a short term loans can be risky because they have high interest. Short term loans requires you to pay back within a short period of time like 2 weeks.

The fee can quickly add up when you don’t have money to repay the short term loan when the time comes for you to repay the loan. The amount you owe will keep roll over to the next due date. For example, if you borrow $1,000 and the fee is $150 per 2 weeks, the interest rate is 15%. The fee can add up to $3,600 if you delay for 1 year and did not manage to pay it back on time.

If the loan is secured, you have to use your property as a collateral. You could lose your property if you cannot come up with the money to pay back the loan. It is best to always use money that you have saved to do your shopping in Christmas. The Christmas festive holiday season can be a temptation for you to borrow a large loan amount for your shopping expenses. Once you have borrowed the loan, you can’t refund it and you will be responsible in making the repayment.

If you are interested in getting a short term loan, make sure you ask them for a complete list of fees including interest and penalty fee. You should find out with your creditor when you are supposed to pay back and what will happen if you are late in making payment. Before applying for the loan, you must be sure that you can come up with the money to pay back both the principle and interest at the due date. You can borrow the money from your friends if you are not sure that you are going to have the money to repay the loan but you need the money to do your Christmas shopping.

The advantage of short term loan is that you can get the money you need quickly. Short term loan will be helpful if you are just temporarily short of cash and you know that you can expect the amount of money you need for paying back the loan at the due date. If you obtain the loan from a bank, you have to wait for a longer time for your application to be processed. The bank has stricter loan application procedure so it can be harder for you to get approved.