Applying for financial help when you’re struggling is common, and many of us will use lenders to help us cope with emergencies. Short-term loans are some of the most popular forms of finance that people reach for when they’re faced with an urgent expense and can include same day loans for bad credit, payday loans, and instant loans. Whilst these loans can be helpful, they can sometimes pose a risk to your financial stability if you do not manage them correctly. We’ll take a look at how you can repay a short-term loan without any added stress below. 

Make sure you can afford your loan 

A short-term loan can be helpful if you need access to funds in an emergency, however, there are a few factors that you need to consider when applying. When it comes to being able to repay a short-term loan with as little stress as possible, you’re going to need to think about whether you can truly afford it before you apply. This doesn’t just mean looking at the amount of the loan, it means considering the other fees that will come along with it, such as: 

  • Hidden fees: There are sneaky hidden fees that can come along with short-term loans, for example, there may be application fees that you need to pay when you apply, which may vary depending on the lender. You should also check for late repayment fees, so you know how much more you’ll have to pay if you miss a payment. 
  • Interest: This is an amount added to short-term loans, and the amount can differ depending on a few factors – your credit score, whether you can afford the loan and the term of your loan. Make sure you calculate this correctly to give yourself the most accurate sum when it comes to how much you’ll be paying back. 
  • Loan amount: You should always make sure you never borrow more than you can pay back. If your loan amount looks like it’s going to be too much for you to manage, or you don’t think you’ll struggle to make the repayments, steer clear and look at other options. 

Choose a manageable repayment term 

Short-term loans have exactly that, a shorter period for repayment. Depending on the type of short-term loan you choose, the term may vary. For example, payday loans tend to be paid back within a month. Other short-term loans like bad credit loans can range from around 3-6 months. To ensure that you can pay your short-term loan off without stress, make sure that you choose a loan that comes with a repayment period that suits you. If you think stretching your loan over a few months will make it easier to manage, find a loan that offers this. If you would rather pay it off quickly so it’s not hanging over you, opt for a small, short-term option. Other short-term loans like bad credit loans can range from around 3-6 months

Create a budget 

Make sure you have a budget in place to help you. If you are trying to repay your short-term loans without falling into financial difficulty, working your repayments into your budget is crucial. You should start by taking a look at your income for the month, then subtract your primary expenses – bills that are recurring that you couldn’t live without, like your mortgage, or car finance. Then take a look at the money you have leftover – prioritise your repayments over other, more unnecessary things. Make cutbacks if you need to, and this will help you get rid of your debt more easily. 

Talk to your lender 

If you think you’re going to struggle to pay back your loan in the time frame agreed with your lender, it’s always best to get in touch with them. You won’t be the first or the last person to struggle, and they’ll be able to help you handle your finances. They will be able to point you in the right direction when it comes to giving you advice, they may also be able to offer you the chance to have your interest payments frozen or suspend the charges to make your debt more manageable. Contacting them before you default can help you reduce the stress that comes with outstanding payments. 

By Grace