A short term loan was originally designed to lend a small amount of cash to consumers with the collateral being a check. However, over the last few years short term loans have evolved beyond the traditional lender storefronts, to having cash loans online from companies like Wonga, and even having small loans available from your regular bank. So, what is this growing trend, and when it comes to quick cash is Wonga right for you?
Short term lending has been a booming business over the last few years, especially coming out of the worst financial crisis since the Great Depression. In a recent article from the New York Times, it was highlighted that nearly 6% of Americans used payday loans in 2010, a number that is sure to grow in the coming years.
With the growing popularity of getting a short term loan, more government oversight from regulators like the Consumer Financial Protection Bureau have made lending more consistent and safe for consumers.
What You Should Know
However, it is important to note that getting a quick loan is still a loan in many senses of the word, and there are certain restrictions and information you need to know. These loans are designed to be short term, so make sure that you know your due date, and pay it back on time. Failing to pay back a loan on time can result in added fees, and negatively impact your credit score. Alternatively, Wonga is one of the companies that allows borrowers to choose the date they pay their loans back, so if you’re after more flexibility then they may be the choice for you.
It is also important to note that in its traditional format the loan is usually backed by a check you write to the lender, or by authorizing a direct debit of your account. If you don’t repay the loan on time, the lender may cash the check or debit your account. If you don’t have the money available, you could also face fees from your bank as well.
As with all lending, make sure that you are being responsible, and make sure you choose the option that is right for you.