Published On: Thu, May 3rd, 2018

The Rise of Short-Term High-Interest Loans Across Europe

While short-term high-interest loans are a bit risky by nature, they are still very much in demand among many Europeans. This is especially true with many lending institutions going online to attract customers. Lending companies such as smslån are very popular among online customers.

Why are these kinds of loans so popular in Europe? Here are a few things to know about short-term high-interest loans:


What Exactly are Short Term High Interest Loans?

In a nutshell, a short-term high-interest loan is a loan that can be provided right away and should be paid for a short period of time. While this is very convenient for people who need money right away, there is a cost that comes with it. These types of loans have high-interest rates.

Some common types of short-term high-interest loans that you might encounter are payday loans, text loans, and emergency loans.

Why Are Short Term High Interest Loans Popular?

Short-term high-interest loans, more particularly payday loans, are often the first resort of financially struggling Europeans. In fact, the UK has one of the fastest growing payday loan markets in the entire world. Reports do state a drop in the overall sales of the payday loan sector in the UK since the year 2016 due to added regulations. Even so, the industry still maintains its solid stand. This means that there is still a demand for these types of loans, and lenders are more than willing to supply.  

While it is hard to pinpoint all the driving forces behind the demand for short-term high-interest loans, we can see some several reasons why they are popular:


  • To Cover Emergencies


This is one of the main reasons why people get short-term high-interest loans. If a loved one gets sick or gets into an accident, you need money on hand to pay for hospital bills. If you currently don’t have enough, you need to borrow some money fast.


  • To Cover Some Bills


If you have a lot of bills to pay and just lost a job, you’ll need to have some money to cover your fixed costs while you waiting to be accepted for another job. Otherwise, you’ll lose your shelter and starve.


  • To Cover Unexpected Costs


Unexpected costs come in many forms such as a new baby, the death of a loved one, or a lawsuit. In the event that something like this happens, you need money quickly. If you don’t raise enough funds, you might end up with more unexpected cost.


  • To Get a Better Credit Score


Many people don’t get their loans approved because of a low credit score. One easy way to get a better credit score is to get a short-term high-interest loan. It’s easy to get, and if you pay it on time, you’ll get a better credit rating.

Final Thoughts

Because of its high-interest rate, a short-term high-interest loan should never be your first resort when you are struggling with money.  Try other options beforehand.

Author: Jonas Fiedler

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