Short term loans can have a repayment period of up to three years. Most secured short term loans have a repayment term of twelve months up to thirty six months. Some lenders offer repayment terms up to forty eight months and there are a few short term loans with five year terms. However, five year repayment periods are not always classified as short term loans. Payday loans are unsecured short term loans but they usually do not have a repayment period of up to three years. When payday loans were first introduced in the United Kingdom, they were designed similarly to their counterparts in the United States. Payday loans had a repayment term of one month. That is no longer the case.
Payday loans, by definition, should be repaid on the pay date, when the borrower gets the salary credited to their bank account. There would be an auto debit in place and the entire loan amount with the accrued interest would have to be repaid at once. This is why such short term loans are called payday loans. No matter when you apply for the loan and how many days till you get paid by your employer from the date of getting the loan approved and subsequently credited to your account, you will have to repay on your payday. The repayment is set up accordingly. Over the years, payday loans have undergone substantial transformations. Today, when you apply for payday loans through Payday Pug, you can choose repayment terms varying from three months up to eighteen months.
Borrowers don’t go for a thirty days repayment term. It is almost unrealistic from multiple perspectives. Lenders of short term loans have also realized the same. Payday Pug facilitates payday loans that have a minimum term of three months and a maximum term of eighteen months. However, the exact term will still be decided by the lender of such payday loans. You would have to choose accordingly. Many lenders will be flexible with the repayment terms. Some will not allow you to negotiate this. You can proceed on the basis of your discussions with the lender and how you wish to set up the repayment.
It is always better to go for a longer repayment term. If you are being offered six months, you must assess if that is enough time for you to repay the entire loan amount with interest. Convenience and affordability are the two decisive factors here. You should not commit to pay an installment that would become a little difficult for you. It is imperative to bear in mind the other expenses that you would have to take care of anyway and it is not just for one month but throughout the repayment term. There is one argument in favor of shorter terms. The interest accumulating on the loan amount will always be less if you go for shorter terms. If the rate of interest is not changing, then there is no dispute that you would pay much more for a twelve month term than what you would owe in a three month term.
Interestingly, some lenders will increase the rate of interest for shorter terms. This is simply because they want to make more money. It is another matter that you should choose lenders of short term loans that have the least interest. Some lenders will offer a more reasonable rate of interest for longer terms because they too know it is easier to repay smaller amounts every month than larger sums over a shorter period of time. You have to do the math at the end of the day. You can consider a shorter term and a longer term, calculate the interests you owe and then check the difference. If the difference is huge, then you can settle for a shorter term. However, you would still have to shell out more every month for the three or six months.
Affordability has to trump everything else here. Longer repayments will always be easier because the principal amount or the loan amount is getting divided into smaller sums over a longer period of time. Paying a little more in interest over a longer period of time would not hurt if you are paying much less every month. The objective is to repay payday loans completely without falling into a cycle of debt.