Student short term loans – good or bad?

It’s a funny thing because nothing that we write seems to get as much feedback on LondonStudent.co.uk than articles on the subject of short term loans.

Many of the comments are positive. We receive stories from students who have used sites like this to get a short term loan and have done so hassle free and it’s really helped them out of a hole, but there is another side. Some of the messages we receive after posting news on the subject of cash in a flash are from irate students who feel that pay day loans companies should be scrapped because of larger than usual APRs.

Higher APRs are definitely the downside to “payday loans”, “short term loans”, “instant cash loans”, “same day loans” or whatever else they are called, but there’s reasons for that. Often when decisions on giving a loan are made quickly, borrowers aren’t scrutinized as much as they might be by a bank for example. Therefore, there’s extra risk for these types of lender and this risk has a cost. Many of these lenders are also in the business of borrowing – often their business involves borrowing a larger amount over a period of time and then having to arrange to chop up that amount into smaller, repackaged loans, where they are now the lender. This adds in greater costs both because of the risk and the number of borrowers involved. Also there is the cost of capital for the lender too.

Well as students, critical thinkers and problem solvers, take into account the APRs at the time of borrowing and if you ever need ‘instant cash’, a ‘same day loan’ or a ‘payday loan’ to get you out of a short term pickle, then that’s what these types of loan are designed to do.

Tags: finances, money, student loans

Category: Deals