Loans: The Long and the Short of It

Is your loan continually asking you about where you see your relationship with it in five years’ time? Do you worry about committing to your loan in the long term? Does your loan incessantly nag you about how your friends have settled down with their own loans and bought houses and cars together? Does your loan moan about how you aren’t as attentive as you used to be and feel neglected? Does your loan pester you for money towards the end of every working month?

If you have answered ‘Yes’ to any of these questions then you may wish to seek medical advice  loans cannot talk. However, if you have answered ‘Yes’ to any of these questions, whilst being fully aware of the metaphor at play, then you may wish to consider ending your relationship with a long term loan and starting a new relationship with some of the short term loans that are on the market.

Short Term Loans: A Brief Fling

If you are currently unattached to a loan then you can find plenty of willing short term loans on the Internet that are ready and willing for some short term fun with no strings attached. Starting a relationship with one of the short terms loans that are out there need not be a daunting prospect.

Unlike long term loans who insist on a boring, drawn out relationship, short term loans are the financial equivalent of a brief and exciting fling! Furthermore there are plenty of short term loan options available out there just waiting to snap you up and provide you with a bit of fun!

APR: The Poorly Matched Suitor of a Short Term Loan

It is a common misconception that short term loans charge extortionate amounts of APR. The fact of the matter is that APR is designed to measure the amount of money repayable to the lender over a 12-month period or more. Thus, the annual percentage on any long term loan reflects the difference between what is borrowed on Day 1 of the loan and the amount that will have been repaid by Day 365 of the loan.

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Thus, by this long term process, interest accumulates over a drawn out period of 12 months. By such reckoning the amount repayable on a 36 month loan of £2000 with an APR of 16.9% would be £2973.96. On the other hand the amount repayable on a short term/one month loan of £1000 with an APR of 1355% would be £1250. Furthermore, because you can opt to pay your short term loan back at any point between Day 1 and Day 31 additional long term interest doesn’t accrue.

Using an annual percentage rate to measure the amount repayable on a one month loan is a bit like using a 30cm ruler to measure a grain of sand in the sense that when applying APR to a one month loan you are using something that is designed to measure long term loans in order to measure short term borrowing.

When to Opt for a Short Term Loan

Short term loans can help you through more difficult times of the year such as Christmas or bolster your available cash until you wait for your next pay day. They offer you a short term solution to a short term problem and won’t tie you in to large amounts of borrowing that require continual repayments for the rest of your long term future.

Short term loans are specifically designed to offer you financial assistance over the course of a few days or weeks. As such, the duration of repayments on a short term loan will obviously be shorter than the repayments on a long term loan; meaning that you are not continually bound to a long term obligation of monthly payments. To this end, because your short term loan can be repaid in less than 31 days you won’t be paying off continually accumulating interest over a longer period of 5 to 25 years.

Short term loans can inject fun and cash into your life for anything between 1 and 31 days. They won’t hassle you for money at the end of every single month and they most definitely won’t nag you about your future.

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