3 Main Types of Short-Term Loans
Installment loans are taking over the market as they are the most flexible from the short-term loans list. The principal and interest rate are paid in a few fixed installments over short period of time according to a timetable settled by you and the lender. The flexibility consists in the possibility of making a few adjustments and make pre-payments. At Credit Cube, we actually encourage you to make pre-payments and finish off your loan faster. For more details about the rewards you can get, check our Loyalty Program.
Payday loans are also popular but more and more people are starting to avoid them because of the high interest rates and low flexibility. The lenders calculate payday loan fees in two ways: as a set amount per $1 borrowed (for example, $15 for every $100 borrowed) or as a percentage of the amount you borrow, like 10%. Their repayment cycle can be tricky and sometimes you might end up paying them back for months for much larger amounts.
Overdraft loans are made between you and your bank. They allow you to overdrawn or borrow a certain sum of money from your account that needs to be paid back over a short period of time. They carry different interest rates and fees. In some cases, banks charge a monthly or a daily usage fee, which may be instead of interest or in addition to interest.