Short Term Loan Products – What’s Available to Everyday Australians?


The loan market’s filled with a variety of short term loans, so which one’s best for you? We’ve put together a quick guide to help you select the right one.

Start by answering these questions:

  1. How long do you need the loan for?
  2. What do you need the short term loan for?
  3. How quickly do you need the money?
  4. How do you plan to pay the money back?
  5. Who should you get a short term loan from?

Asking yourself these questions will help you narrow down the list of loan products you should consider. There are many different factors that determine things like interests rates, paperwork and amount borrowed. This includes the length of time the loan will be taken out, the purpose of the loan, how quick you need the money and your plan to repay the loan.

So you’ve answered these questions? Let’s take a look at the short term loan products now:

1. Cash Advances & Payday Loans

This is the quickest option for a short term loan and is usually a smaller loan amount of under $1000 that is repaid within days or weeks and assessed on your employment and pay cycle. Cash advance and payday loans are a great option for things like car registration or insurance, or for repairing appliances around the house.

2. Short Term Unsecured Personal Loans

Unsecured personal loan amounts tend to fall between $5,000 and $50,000 and are usually repaid over one to seven years. Be conscious of your repayment frequency though, as making more frequent repayments can take months off your short term loan repayment time and save you a lot of money in interest charges.

3. Short Term Bank Overdrafts

If you have a good relationship with your lender and a clean credit history then a bank overdraft can be put in place that allows you to overdraw your account for a pre-approved amount and agreed repayment period.

4. Short Term Secured Loans – Caveat Loans, Second Mortgages & Bridging Finance

Caveat loans, second mortgages and bridging finance can be used to cover shortfalls you may experience. These loans are commonly used to bridge a gap in a property purchase (say for example, you are waiting for money to exchange hands after selling your property), for business reasons (for example, covering a tax debt), or for investment purposes (like covering a ‘margin call’). The loans are secured against real estate property and usually require you to tell the lender when and how you plan to pay the loan back.

5. Personal Loans Secured Against Motor Vehicles

If you don’t have real estate property to secure your loan, many lenders can lend up to $10,000 if they can secure it against a motor vehicle that is paid off and of equal (or greater) value.


How Much Will a Short Term Loan Cost?

The interest rates and charges on cash advances and payday loans are usually higher than on short term bank loans due to much smaller loan amount and shorter repayment terms. However, if you need to solve an urgent problem the increased cost can be easily justified to solve a problem quickly.

The next costly are unsecured personal loans as they are larger loan amounts repaid over a longer loan term, presenting a greater risk to the lender.

Given that caveat loans, second mortgages and bridging finance arrangements are often put in place to solve urgent cash flow problems, they tend to have slightly higher interest rates and charges.

Finally, secured personal loans often have larger loan amounts and longer loan repayment terms, but offer lower interest rates and charges. An example of this is refinancing your home loan and using your home as security, which can often involve 25 to 30 year loan terms.

To enquire about a short term loan with NSW Mortgage Corp simply call 1300 137 778 today to speak with a loan consultant.

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