Short term Loans
Loan reviewing and disbursement
Short term loans refer to amounts borrowed from lenders and should be repaid within a short period of time. Short term loans usually last for a couple of weeks or months. These loans usually vary in amounts depending on the borrowers needs and the lenders minimum and maximum lending amounts. Short term loans are usually set for repayment on the borrowers’ payday for easy recovery and also to avoid financial stress of any form. Short term loans in most cases are used for emergency situations which are never planned for.
Installments refer to the amount that a borrower should be paying back monthly or weekly to repay the loan taken. Installments are usually calculated based on the loan amount, interest rate offered, and loan period.
Interest rate refers to the extra charges that a borrower has to pay in addition to the loan amount borrowed. Interest rates are usually quoted in the APR (Annual Percentage Rate) format and come in percentage form. The lenders usually charge a certain percentage of the loan taken which is added to the loan taken to form the loan balance. When the interest rates are low, the loan is termed as a cheap loan. These rates greatly differ between secured and unsecured loans
Default refers to failure to make loan repayment over a period of time. A default is usually recorded in the credit file and is a cause for bad credit rating. In case of default, the lender usually concludes that the borrower will not be in a position to pay back the loan balance. Default result results in bad credit rating thus making it harder for an individual to get a loan from organizations that carry out a credit rating check before giving out credit.
A loan in Arrears means that the borrower missed making a timely repayment in one or more of the loan’s installments. A loan in arrears is quite different from default cases since it is only that the repayments are late. Arrears result in a bad credit rating of the borrower though the credit rating is not as adverse as in the case of default.
Early repayment fee
When a loan is given, dates are set for the loans repayment. Funds are usually not deducted to repay the loan until the specific repayment dates set arrive. However, in some cases, one may feel the need to repay the loan early. In some companies, early repayment for the loans warrants for early repayment fees. These are additional fees charged on the client for making an early repayment. In companies that ask for no early payment fee, the borrower only pays for interest rates up to the day they pay back the money and not for the whole loan period as outlined earlier in the agreement.
Credit rating refers to the ranking an individual is given based on their history in loan repayment. There is both good credit rating and bad credit rating. Good credit rating is given to individuals that have been able to borrow and repay their loans well without difficulty thus proving to be low risk borrowers. Bad credit rating is given to individuals that took loans but had difficulty repaying the loans thus proving to be high risk borrowers.
This is a term used by lenders to help them decide to give or not to give a loan. The credit scoring results in the approval or decline of a loan. Various contents in the loan application are scored to give the overall credit scoring of a particular loan application.