What to think about before you apply for a short-term loan

Unexpected financial needs can arise at any time, and in such emergencies, short-term loans can provide relief. However, it’s key to be able to distinguish between necessary expenses and discretionary spending to avoid habitual borrowing which can lead to a cycle of debt that’s hard to break.

Please see the press release below key considerations consumers should consider before taking out a short loan.

Five key considerations before you apply for a short-term loan

Life throws financial curveballs, and sometimes a short-term loan can be a lifesaver. But before you jump in, it’s crucial to carefully consider why you need the money and, more importantly, how you’ll repay it.

As Niresh Gopichand, Atlas Finance Risk Director, advises: “In today’s economic climate, it’s tempting to rely on loans to make ends meet. However, unchecked borrowing can quickly spiral out of control. Short-term loans are designed for unexpected expenses like fixing a leaking roof, small home improvements or temporary cash flow gaps for example unforeseen medical expenses.”

Gopichand adds that when managed responsibly, short-term loans can provide much-needed relief and peace of mind.

Here are five key considerations to keep in mind before taking out a short-term loan.

1. Purpose and need

You can rely on short-term loans for the right reasons. Carefully assess why you’re considering a loan and assess your requirements and borrow only what you need:  borrowing more than needed may tempt you to spend the additional money unnecessarily.

2. Eligibility and requirements

Before applying, ensure you meet the eligibility criteria, which often include being at least 18, having a bank account and ID/passport, and proof of steady income. Each lender may have additional requirements, so it’s wise to research and compare.

3. Regulated compliance

Check that your chosen credit provider is registered with the National Credit Regulator which ensures financial services providers comply with rules and regulations governing lending. It’s also important to carefully review the interest and loan terms and ask questions if anything is unclear. Double-check the fees and any extra charges associated with the loan to avoid surprises.

4. Pay back the loan

Understanding the loan terms allows you to budget effectively and ensure timely repayments. This responsible behaviour has several advantages including preventing debt accumulation. By avoiding late payments you prevent additional fees which keeps your repayment manageable. Responsible credit usage helps maintain a healthy financial standing and timely repayments demonstrate your credit worthiness leading to a higher credit score. This positions you favourably as a reliable borrower and helps in the future when seeking other financial products.

5. Use loans wisely

Be careful and only borrow what you need for essential expenses as the temptation with extra money sometimes is to spend on non-essentials. Short-term loans should serve as a temporary fix for emergencies, not as a source for non-essential purchases. Prioritise responsible borrowing and explore all available options before borrowing.

About Atlas Finance

Founded 30 years ago in 1994, Atlas Finance is a registered financial services provider (FSP)  offering short-term loans, debt management services, loan consolidation, and international money transfers. Atlas Finance prioritises responsible lending and operates on principles of warmth, fairness, and respect of its staff and customers. Authorised as a financial services provider (FSP 46412, NCR CP 3994) and a member of the MFSA, the company has afforded millions of clients with unexpected emergencies to access financial assistance. https://www.atlasfinance.co.za/