Friday, August 17, 2012

Can You Pay Back A Short Term Loan After Christmas?

It's a time of year when we can all get a little trigger happy with the credit card and dig deep into financial reserves. In fact, for some, Christmas is enough to push them into the red, which means finding extra finances elsewhere. There are a number of borrowing options available; increasingly though, many are turning to short term loans to achieve a quick fix. But can you pay a short term loan after Christmas?

Well, a lot will depend on two very important factors:

1) When you apply for the loan
2) Which lender you choose to borrow from

The reason for this is very simple; most payday loan companies won't allow you to go beyond four weeks or 30 days. Therefore, if you're applying in November the loan will need to be repaid during December.

Some companies will allow for longer borrowing periods though, notably those who charge a daily rate of interest. However, this isn't available everywhere. So if you know you need more than a month to get your finances in order, you'll need to find a short term loan provider who can accommodate your requirements.

One way around this is to simply repay the short term loan in December and then re-apply in the same month if your funds begin to dwindle again. However, this isn't recommended, particularly if you are likely to become reliant on borrowing more and more to cover your debt. If you do your sums though and will be able to cover the full amount in January, then you shouldn't suffer any long-term ill effect from the loan.

The reason for this warning is that short term loans are a more expensive option than the usual personal loan. Whilst the cost isn't huge if you only borrow a small amount and repay it on time, it can quickly add up if you do become reliant on borrowing across multiple consecutive months.

For instance, you might pay 100 to borrow 400, based on a 25% rate of interest. Now if you were to do this once, or even a couple of times, it wouldn't have a major impact on your finances. However, should you get into more difficulties and continue to borrow the same amount, or even more, then these costs can quickly spiral, leaving you with a major legacy of debt. So it is vitally important that you evaluate your situation, the options available to you and the long-term impact of any borrowing that you do undertake.

The great thing about short-term loans is that they are widely available. You won't get stuck waiting for a decision and you won't need a spotless credit history to be accepted. Therefore if you're in a real financial quandary and your options appear limited, it is a potential solution. This is especially true around Christmas time when expectations and spending are often at their highest.

If you end up unable to buy presents, decorations or the trimmings for your Christmas dinner, you can quickly ruin what should be the best time of the year. This doesn't mean that you have to go mad, buying top price turkey, tinsel and toys for the kids, but an awareness of your financial position, how much you can afford and where you can borrow from should the worst happen is certainly recommended.

As such, you can very easily repay your payday loan after Christmas is done and dusted. This will give you time to enjoy the whole festive period and bridge your overall costs into the New Year.

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