Everything You Need To Know About Short Term Loans


Everyone experiences financial troubles. If you lose your job, you can’t afford to pay your bills. If your car breaks down or your geyser bursts, you’ll have to dig into your finances to pay for these unexpected expenses, which might set you back. Alternatively, you’ll have to take out a short term loan to help you pay for them. Here is everything you need to know about this type of loan so that you have all the information required before taking one out.

What Are Short Term Loans?

A short term loan is the type of loan which allows you to pay it back quickly. Short term loans typically span between one and three months, which means that the loan can’t be consolidated after four months at most, have passed.

The timeframe does differ from one lender to another; however, the bottom line is that all short term loans are aimed toward people who need small amounts of additional financing quickly, to assist them in their immediate situation. For example, a person with a car that needs extensive repairs could take out one to pay for the repairs.

How Small Are Short Term Loans?

Once again, the amount of money you could get in a small short term loan differs from one lender to another; however, they usually range from $300 to $10 000. Because short term loans need to be repaid in a short period, lenders need to be realistic in what people can repay in that time, so they don’t offer more.

How Do You Qualify For A Short Term Loan?

Short term loans are accessible for many people across New Zealand. However, some requirements still have to be met. If you don’t meet the requirements, your application will be rejected. You need to be able to provide evidence of the following:

  • You must be a New Zealand citizen and permanent resident
  • You must be at least 18 years of age
  • You must have a bank account which has been active for at least one pay cycle
  • You must hold employment which electronically deposits finances into your bank account regularly
  • Your income must be at least $400 per week
  • You must have a form of identification which can be verified
  • You must have a smartphone and valid email address

What Are The Credit Requirements For A Short Term Loan?

When you apply for a loan – even in the short term – your credit may affect your chances of approval. Depending on your lender of choice, you might not be able to acquire a loan if you have bad credit, have been blacklisted or if you’re under review for having unpaid debts.

Will My Loan Application Hurt My Credit?

If you’re fortunate enough to have good credit, your credit score might be the reason your loan application was approved. However, will a short term loan affect your credit score negatively?

When your credit score is checked, it’s called a “soft enquiry”, and has no adverse effect on your score. Your score is calculated depending on if you’re in the habit of making repayments on time in the past, or not. The only way your loan will hurt your credit score is if you fail to repay the loaned amount on time.

What’s The Difference Between A Long Term And Short Term Loan?

The most significant difference between long- and short-term loans is the timeframe that is given to repay the loans. Short term loans do not extend for over four months. Long term loans are usually paid over a period of years because they’re traditionally home loans, vehicle financing, or for renovations or business equipment. These are paid off in the long term because the amounts are significantly higher. However, it’s important to remember that the longer you take to pay off a long term loan, the more interest you’ll be paying, so it’s essential to try to pay off your short- and long-term loans as quickly as possible.

Do I Have To Pay My Short Term Loan In The Allotted Timeframe?

Short term loans are sometimes referred to payday loans, which are meant to help shoulder the financial burden if you run out of money before your next income is paid into your bank account. However, typically three months are provided to repay a short term loan so that the burden of repayment is lessened.

However – whether you’re paying for a short- or long-term loan – the sooner you pay it off, the cheaper it is, because you’ll be charged less interest. When you take out a short term loan, you’re able to make payments when it suits you and your financial situation. Whether it’s with your next paycheck, or over the allotted 1-3 months, you’ll be able to repay it comfortably. As long as you repay your loan on time, you won’t have a problem, and your credit score will be unaffected.

What Fees Can I Expect?

Included with the loan that you need to repay, you can also expect interest, GST, service and initiation fees. These will all be included in the lump sum that you owe and will be paid off when you make the payment every week or every month as you reimburse your lender. Because the process of applying for and receiving the finances for a short term loan is relatively fast, and how flexible your lender is during the repayment period, the added fees are typically reasonable.


Thousands of people across New Zealand suffer from financial constraints like yours. Your employment might be limited, which means that your income may not leave much money left over after you’ve paid your monthly expenses. When an emergency comes up, you might find yourself with a problem. How can you pay for expenses that are likely to pop up when you least expect it?

One of your options is to obtain a small-term loan. If your application is successful, you can borrow the money that you need, and pay it back on time. Paying it back in instalments allows you some breathing room, which makes the process of reimbursement easier for your pocket and your stress levels.

When you need assistance, contact Cash Relief. Situated in New Zealand, we provide payday loans and short term loans for people in need. Call us for more information today.