3 month loans
If you are considering taking out a personal loan, one of the key things that you need to decide is how long you want the repayment period to be. The repayment period is the amount of time a lender gives you to completely repay your loan.
Repayment periods can vary enormously, from days to years. Most personal loans tend to have repayment periods of around 18 months -24 months. But some are considerably shorter.
Let’s take a quick look at 3 month loans, i.e. personal loans that have a repayment period of only 3 months.
The disadvantages of 3 month loans
On the one hand, a short repayment period seems like a great idea because in theory it means that you can get the loan repaid as soon as possible. So when you see a personal loan being offered with a 3 month loan repayment period, this can seem ideal.
The main problem with a short repayment period such as a 3 month loan is that the loan repayments are often very high in order for you to be able repay the loan within that timescale. With a 3 month loan you may find yourself struggling to make the loan repayments so soon after taking out the loan in the first place. This could even cause you to fall further into debt.
In which case your 3 month loan has not actually helped your financial situation, but instead has made it worse.
Alternatives to 3 month loans
A better option may be to look at a personal loan with a longer repayment period, for example 18-24 months. This gives you plenty of time to pay the money back without the loan repayments being a struggle.
Even better is if you find a personal loan that has no early repayment fees This could enable you to repay your loan earlier than the 18-24 months if you find you are able to do so.
So a loan with a longer repayment period – but no early repayment fees – could be a much more flexible and reliable option than a 3 month loan, and be a more helpful financial solution for your current circumstances.