October 8, 2018
Times When Short-Term Loans Might be Right for You
The term “loan” comes with some weight for many in the Millennial and Gen Z range because of the consequences of student loans. While most student loan lenders expect their borrowers to pay off their loans in ten years, most take double that time to pay off. With statistics like these revolving around student debt, it’s plain to see why so many young Americans have a hard time believing that loans can be anything but long-term. But loans did not always use to carry this connotation , and there are many today who do not take advantage of short-term loan options because of the connotation. Here are some instances in which a short-term loan in Kansas City might be right for you.
When Is the Right Time for a Short-Term Loan?
When you have a stable income but need a little extra boost
There are many people out there who want to purchase big items and might have the extra money to take on monthly payments on a loan but do not have the extra money to take on a full purchase. People in this scenario take out short-term loans on things like computers, textbooks, car improvements, home improvements, and personal events like weddings. Those who take out short-term loans for these reasons often have plenty saved up toward the item or event that they wish to purchase and have no problem paying off the loan in a short period of time.
In fact, these are why short-term loans in low amounts are often called payday loans. This is because they are meant to “carry you over” in the times that you are short on cash.
When you’re looking to fund a big purchase for a small business
Small businesses are aware of the upfront costs that come with startups. For those who are not in business, the reality is that is not cheap to start any sort of mainstream business. For instance, the median cost to start up a restaurant is $275,000.These figures cannot be accomplished with the help of a short-term loan, and businesses know that. Often, this money goal is achieved with the help of investors, a bank loan, or just blood, sweat, and tears.
For those with established businesses, however, unexpected costs can come out of nowhere and during the worst times. If a small business needs a repair on a necessary element of their business but might not have all the money in their budget to fund this, this is when a short-term loan might come in handy.
When you do not have any willing investors to help you with a purchase
Then there are those with great ideas and no connections. Investors don’t just come out of thin air. Large businesses who are funded thousands of dollars and who obtain investors often know these people beforehand – and that is their collateral. It is harder for one-person ventures to find funding like this because they just don’t have the interpersonal collateral.
For smaller-scale entrepreneurs, there might be some worth in obtaining a short-term loan. Sometimes people have a big idea that they know will shake the world but don’t have the cash to make it happen. Short-term loans provide enough money without a credit check or bank application to fund smaller entrepreneurial purchases like materials to construct an invention, a down payment on a rental shop or airfare to pitch your invention to someone halfway across the country. In these cases, a short-term loan could be a huge return on investment down the line.
When you have collateral, like a car, that is worth a fair amount of money
Short-term loans are often perfect for those with less-than-average credit scores because they do not always require a credit score. Instead, loans like car title loans and payday loans ask for alternate pieces of collateral as payment terms. This allows you to borrow up to the estimated worth of your item and get you the cash that you need for whatever reason you might need it.
If you’ve got this type of collateral, make sure that you can make the payments on your loan. People are often tempted to take out loans on large purchases but neglect to consider a budget for your loan payments.
When crowdsourcing doesn’t work
Crowdsourcing platforms, like GoFundMe and Kickstarter have skyrocketed in the past decade. In fact, one study pointed out that 1 in 3 GoFundMe campaigns are focused on paying off medical care bills and a staggering $650 million dollars were raised on GoFundMe last year. These statistics make one thing very clear – that health care costs are much higher than they have been in the past and many people nationwide cannot afford the premiums associated with visiting a healthcare provider, causing them to need assistance with basic medical care. Healthcare aside, this also shows that millions more are being funneled into other personal ventures, like music albums, art projects, and trips around the world.
But sometimes, crowdsourcing is not the best answer for funding purchases that you can’t pay out of pocket. Crowdfunding is not a financially secure way to try and pay for more pressing things, like surgeries and medical bills because there is no guarantee that your campaign will ever reach its goal. In fact, statistics show that nearly 90% of those who try and raise money for a personal campaign do not ever meet their goal. In times when crowdsourcing doesn’t work, or in cases when it is very important for people to meet their fundraising goal, considering a short-term loan is a better route to go down.
There are many more reasons why you might need to take out a short-term loan, but in the end what it all comes down to is that each reason for needing monetary assistance is a personal reason and attempting to try something that lots of other people try, like GoFundMe campaigns, is not always the best answer. If you’re looking to fund your next purchase, consider a short-term loan in Midwest Title Loan’s Kansas City location. We will be able to help you determine the best financial path to take to get you to your goal.