In UK, short-term loans are becoming more popular lately. To get this type of loan is easy,
because of the minimum requirements for the borrower. But as in all types of loans, this also has
its own nuances, which you should get acquainted with before signing the contract.
What are short-term bank loans?
This term means short-term loans or guaranteed loans, issued for a period of not more than a
year. It is because of the small loan terms that these loans are considered to be the least risky.
The monthly repayment of the loan does not exceed a third of the borrower's salary. In the event
that the payment is overdue, the bank has the right to impose a fine for each delayed day. On
short-term loans of banks are charged quite high interest. The rates for such a loan depend on
several factors. The most important are the material condition of the borrower and his credit
history. If the recipient of the loan has long been a client of the bank, then the volume and
turnover of funds on its accounts are checked. On average, the rate in rubles is about 15-25% per
annum, in the US currency it drops to 13-16% per annum.
What is necessary for registration?
You should start with the application. It is made in free form, which must necessarily contain
information on the terms of the loan, the desired loan amount, its purpose and the main sources
of debt repayment. The list of documents for all banks is different, it can be found directly in the
credit institution. It is necessary to have a passport, sometimes they require a certificate from a
permanent place of work. For this type of loan, a guarantor is also needed, although in some
exceptional cases it is possible to do without it.
Particularly valuable collateral
Securities may be pledged by the recipient of the loan. Employees of the financial institution
should be convinced of their authenticity and high cost on the exchange. After the audit, a
contract is drawn up, which indicates the fact of taking the securities of the borrower on bail.
After that valuable property is transferred for storage to the bank and is returned to the borrower
only after covering the debt obligations. In case of delay in a monthly payment, a credit
institution can sell securities at its discretion. In the presence of such a pledge, a surety is, of
course, not required.
Liability for Insolvency
Credit officers of the financial institution regularly monitor the accounts for the timely and
complete repayment of the loan. If within three months the borrower's credit account does not
receive payments, the bank is entitled to recover the full amount of the loan from the debtor
ahead of schedule, including interest accrued on it. In the absence of any payments from the
borrower, the creditor may, in a judicial proceeding, file a penalty on the property.
Short-term loans for legal entities
Such borrowers include cooperatives, private enterprises, small enterprises, etc. For legal entities
such a type of loan can be issued for a period of not more than ten months. For each delayed
payment a fine is charged in the amount of twice the monthly rate. To take the loan, the
following documents are provided: the balance of the enterprise, letters of guarantee, property
pledge agreement, documents that can confirm the intended purpose of borrowed funds. In
addition, there should be signatures of the head and the accountant with the stamp of the
enterprise and the constituent documents. For the above-mentioned borrowers, this type of
lending has a strictly targeted focus.
Advantages of short-term loans
The most pleasant thing is the simplicity of its design. The issuance of short-term loans takes
much less time than for long-term loans. The whole thing is in the process of registration, which
can take several days for long-term loans, as it is necessary to familiarize in detail with the
borrower, his financial position and the liquidity level of his funds. It is necessary to specify all
possible situations that can happen over many years of repayment of borrowed funds.