Finding the Most Popular Short Term Loans Company
You’re almost spoilt for choice if you’re looking for a short-term loan company in New Zealand. With these tips, you ensure you work with a lender who has your best interests in mind.
What can happen to you if you work with the wrong loan provider company?
Just ask this restaurant owner:
A restaurant owner had a pre-existing business loan with a major lender.
He’d always managed the loan well but did make a few late payments over the term.
Overall, however, he did the right thing. But that didn’t matter when it came time to renew the loan. His lender refused point blank, despite his stellar record. Worse yet, they exercised a payback clause that immediately put the restaurant in trouble.
It was only after securing an emergency loan from another lender that the business owner got out of trouble.
That’s just one of many examples of business owners discovering that their loans aren’t all they appear to be.
You need to find a short-term loan company that has your best interests in mind. Quick loans are designed to provide fast access to funds for urgent needs, making them an attractive option when time is critical. These are the six tips that will help you do it.
Understanding Loan Types
When considering a personal loan, it’s important to understand the different types of loans available and how they can impact your financial situation. Personal loans generally fall into two categories: secured and unsecured loans. Secured loans require you to offer an asset, such as a car or property, as collateral. This security often means you’ll benefit from a lower interest rate, as the lender’s risk is reduced. On the other hand, unsecured personal loans don’t require any collateral, making them a popular choice for many borrowers, though they typically come with higher interest rates.
Unsecured personal loans are often used for debt consolidation, allowing you to combine multiple debts into one loan with a single monthly repayment. This can simplify your finances and may even lower your overall interest rate, especially if you secure a fixed interest rate on your new loan. When choosing between secured and unsecured loans, consider your financial situation, the interest rates offered, and whether you’re comfortable using an asset as security. By understanding your options, you can select the loan that best fits your needs and helps you manage your money more effectively.
Credit Score and History
Your credit history and credit rating are key factors that lenders consider when you apply for a personal loan. A strong credit score can help you qualify for lower interest rates and better loan terms, while a poor credit history may result in higher interest rates or even a declined application. To improve your chances of getting a personal loan with a competitive interest rate, it’s important to make all your loan repayments on time, keep your credit card balances low, and regularly check your credit report for any errors.
Many lenders allow you to check your credit report online, and some even provide tools to help you monitor and improve your credit score. By understanding how your credit history affects your ability to borrow money, you can take proactive steps to boost your credit rating and secure a personal loan that works for you. Remember, a good credit score not only helps you get approved for loans but can also save you money over the life of your loan through lower interest rates.
Tip #1 – Look for Proof of Success
This is a particularly important tip when you’re working with a non-major loan provider company.
Proof of success can come in a variety of forms. Testimonials on the lender’s website, coupled with further social proof from review sites, is a good start. If other people have good things to say about the lender, it’s likely that they provide a good service.
And if you can have a conversation or two with previous clients, you can reinforce those notions.
It’s also a good idea to look for positive mentions and features in major publications. In Unsecured Finance New Zealand‘s case, we’ve had features published in Koshie’s Business Builders, Yahoo Finance, and more.
Credibility is the key here. Such publications won’t create positive features about a short-term loan company that doesn’t provide a good service.
Simply put, you’re looking to gather as much proof as you can that the lender is legitimate.
Tip #2 – Always Check the Small Print
This is the issue that tripped up the restaurant owner in our story.
Even major lenders can insert clauses into their contracts that could damage your business if activated. A clause for immediate repayment could leave you owing thousands of dollars with no ability to repay. The small print may also include details about the default interest rate, which is a higher rate applied if you miss payments. Additionally, default fees are often charged as extra penalties for late or missed payments.
Common fees such as the establishment fee and administration fee can significantly increase the total cost of the loan. Administration costs are often included in the loan agreement to cover the lender’s expenses for processing and managing the loan.
It’s important to check the annual percentage rate (APR) and annual interest rate, as these reflect the true cost of borrowing over the life of the loan. Lenders charge various fees and interest rates, so it’s crucial to compare these when reviewing loan offers.
This could lead to the failure of the business and even personal bankruptcy.
Always check the small print of any loan that you consider. As importantly, quiz the lender about any issues that cause concern. Any that aren’t completely transparent with their answers may be trying to hide something from you.
Tip #3 – Ask Them About Your Industry
Ideally, your short-term loan company will have experience working in your industry. They should have a track record of providing loans to people in similar circumstances to yourself.
This shows that they understand the specific issues that you face.
Ask the lender if they can provide examples of how they’ve worked with similar companies to yours. Quiz them about your industry and what they know about the challenges you face.
Now, not all lenders will have worked in your industry before. That’s okay and it’s not grounds for automatic dismissal of the lender. If they’re willing to listen to your situation and provide advice based on the information you provide, they’re likely a good lender.
Tip #4 – Look for Ease of the Loan Application Process
Ease of application is one of the key selling points for any short-term loan company.
The longer the application period takes, the more danger you may place your business in. If you need a loan to resolve urgent cashflow issues, having to wait several weeks for a response won’t work for you.
Ideally, your lender will offer a simple application form that you can fill out on a website. They’ll also commit to providing you with a response within 24 hours. Some lenders can even approve your application and transfer funds on the same business day, giving you fast access to cash when you need it most.
Plus, they’ll communicate with you about any documentation issues and walk you through any concerns.
The key is that they make the process as easy as possible to prevent any delays that could damage your business. Additionally, understanding your loan’s statement period is important for tracking when payments, fees, and interest are applied to your account.
Tip #5 – Look for Repayment Flexibility
You want as much control over your repayment schedule as possible. The best lenders offer flexible repayment options, allowing you to tailor your schedule to your business needs.
This starts with the loan term. Avoid any loan provider company that tries to force you into a term that doesn’t suit your business. The pressure of an overly short term and the possibility of missed payments that it creates isn’t worth dealing with. You should have options when it comes to your term length, including the ability to choose between weekly, fortnightly or monthly repayments based on your cash flow. Keep in mind that shorter loan terms may result in higher monthly repayments, but can reduce the total interest paid over the life of the loan.
Understanding your loan repayment obligations is crucial to avoid penalties. Furthermore, be wary of lenders that charge you for making early repayments. Some lenders may charge fees for early repayment, so it’s important to check these terms. Ideally, your lender will allow you to make extra payments when you’re able and won’t charge a huge fee if you clear the loan early.
Tip #6 – Only Go With the Features You Need
Some lenders may try to push loan features onto your business that you don’t really need. Before deciding, you should understand what can business loans be used for. Avoid borrowing more money than you need, as this can lead to unnecessary debt and financial strain.
Some lenders may offer extra cash or additional features, but you should only accept what is essential for your business. Lenders also set a maximum loan amount, which is the upper limit on how much you can borrow—make sure you only apply for what you truly need. If you already have an existing loan, carefully consider whether you need any additional features or products before taking on more debt.
Products like a debt consolidation loan or hire purchase may be offered as alternatives, but only choose them if they fit your specific needs and financial situation.
The problem here is that such features often come at a cost. If you’re not paying a direct fee to include them in the package, you may have to pay a higher interest rate.
This is where understanding what you need from your short-term loan becomes extremely important. It allows you to confidently refuse features that don’t serve your purposes. This means you’re at lower risk of missing payments or facing fees that you don’t need.
Be wary of any lender that keeps pushing a feature when you’ve established that you don’t need it. They may be more interested in making money from you than in working to your best interests.
Responsible Lending
Responsible lending is a two-way street when it comes to personal loans. Lenders are required to ensure that you can afford the loan repayments and that the loan is suitable for your needs. This means they’ll assess your financial situation, income, and expenses before approving your application. As a borrower, it’s your responsibility to provide accurate information and to carefully review the loan terms, including the interest rate, fees, and repayment schedule.
Before signing any loan agreement, make sure you fully understand the loan terms and ask questions if anything is unclear. If you’re unsure about any aspect of the personal loan, consider seeking advice from a financial advisor. By being a responsible borrower and working with a reputable lender, you can avoid unnecessary debt and ensure that your personal loan supports your financial goals rather than creating new challenges.
Loan Calculators and Tools
Making informed decisions about personal loans is easier when you use online loan calculators and tools. These resources allow you to estimate your monthly repayments, total interest paid, and the overall loan term based on different loan amounts and interest rates. By adjusting the loan amount, interest rate, or repayment period, you can see how each factor affects your monthly repayments and the total cost of the loan.
Some lenders also offer loan simulators that let you compare different personal loan options side by side, helping you find the best deal for your financial situation. Using these tools before you apply can help you choose a personal loan that fits your budget and long-term financial plans, ensuring you’re comfortable with your monthly repayments and the total interest you’ll pay over the life of the loan.
Avoiding Default
Staying on top of your personal loan repayments is essential to maintaining a healthy credit score and avoiding additional fees. Defaulting on a loan can lead to serious consequences, including damage to your credit history, extra charges, and even legal action. To avoid missing payments, consider setting up automatic transfers from your bank account so your loan payments are made on time every month.
If you find yourself struggling to keep up with your loan repayments, don’t ignore the problem. Contact your lender as soon as possible to discuss your options. Many lenders are willing to work with you to find a solution, such as a temporary reduction in payments or a repayment holiday. By being proactive and communicating openly, you can avoid default and protect your financial future.
Long-Term Financial Planning
While a personal loan can provide quick access to money for unexpected personal expenses or major purchases, it’s important to think about how borrowing fits into your long-term financial planning. Consider your overall financial situation and goals before taking on new debt. For example, using a personal loan for debt consolidation can help you combine multiple debts into one loan with a single monthly repayment, potentially reducing your interest rate and making it easier to manage your finances.
You might also explore refinancing existing loans to lower your monthly repayments or save on interest. Building an emergency fund is another smart move, helping you avoid the need to borrow money for future unexpected expenses. By taking a long-term approach and considering how a personal loan fits into your broader financial plan, you can make choices that support your journey toward being debt free and achieving your financial goals.
Work With a Lender That You Can Trust
By following these tips, you’ll find the best quick loan company for your needs. It’s all about establishing transparency and trust as early as possible in the relationship.
Unsecured Finance New Zealand aims to be a short-term lender that you can trust. We offer flexible business loans of up to $300,000 as well as a simple application process.
Are you ready to get started?
Apply online today to receive a reply in 24 hours or less.