National Payday Scholarship 2012 Official Entry SealBy: Danielle Wilson  

Short term financing can benefit a person’s life because it can help you establish credit. I am 20 years old and I am trying to attend college this fall. I have no help financially from my family; I am trying to do everything on my own. If I knew anything about financing before I turned 20 years old, I would have tried to finance plenty of things to establish some credit. They say bad credit is better than no credit and I am starting to believe that. I have applied for several different loans and was not approved for any of them, simply because I have no credit. On the other hand, if I would have attempted to finance some things in my past, maybe the outcome would’ve been different.

Financing is simply when you borrow money and promise to pay it back. For instance if you are a first time car buyer and you do not have all of the money for the car that you have chosen, the dealership will help find a bank to finance you. Once a bank finances you, you have to agree to pay the interest on top of the money that you borrowed from the lender; this helps you to establish credit. You and the lender will set up a payment plan in order for you to pay them the borrowed money back.  Now it is up to you if you have good credit or bad credit. The way that financing can help you establish good credit is if you pay the lender back on time, if not then that can cause you to have bad credit.

Short-term financing however does not only benefit your life in a positive way it could benefit your life in a negative way. For instance, if you get financed for school and you are employed at the time and you promise to repay a certain amount on the loan every month, but you get terminated from your job, what do you do? Loan companies are usually only worried about getting their money back. Once you miss a certain amount of payments, it is going to start to affect your credit, and not in a good way. Sometimes when you do not pay a loan back to the company that financed you; it can ruin your chance of ever getting financed again. There are pros and cons to every situation.

Although short-term loans have disadvantages, as all loans do, they do come in handy. They can help you be more responsible as far as budgeting money and they can come through in a time of need. If you are a student in college and you are employed and you need 2,000 more dollars to pay for a semester, a short term loan may do you some justice. If you are qualified for the loan and they give you 2 months to pay the loan back, you can let the loan company know your income for every month and they will give you an estimate of how much to pay them every period that you get paid.

Short-term financing is very common this day and age. With the economy being the way it is, everybody is going to need a little assistance here and there, and financing is one way to help out. Although I stated the disadvantages of short-term financing, I also stated very good advantages of them. Financing can help you with essential necessities for everyday life. They can also help you in emergencies when you do not have the funds to pay something or just need additional assistance.

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