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| Consider these 5 benefits of Short Term Loan |
At one point or another, there might come a time when an individual will need extra funding -- to start up a business, to pay medical bills, to ease a living situation, or to address a financial emergency. There are various types of loans which differ depending on the purpose, term, amount, and qualifications. But generally, there are two main categories for loan in terms of tenure: long term and short term. For the situations mentioned above, a short term loan can be the more attractive choice.
What is a Short Term Loan?
Short-term loans are defined as borrowings undertaken for a short period to meet immediate monetary requirements. Repayment tenure is usually less than 12 months -- but there are cases when it reaches up to a maximum of 18 months. This is typically the choice when money is needed urgently. It is also the popular option for one-time loan to finance business or personal needs when the amount needed is not that big.
Short term loans can be beneficial for a borrower and here listed are 5 reasons to consider a short term loan over other loan types.
Faster Process and Approval
Because of the limited loan amount, expect a more lenient process for short term loans. Lenders would usually require basic personal information, employment status, salary, and credit history. Applying for short term loan online has been a norm making the turnaround from filling out the form to approval faster and more efficient than traditional methods.
Quicker Money Release
With short term financing, the loaned amount can be secured within the day or even hours after the application approval. Because of the relatively less amount and shorter repayment terms, lenders are reassured that their money will be returned quicker compared to long-term loans.
Shorter Period in Debt
Being in debt, no matter how small or big it is, adds up to all other stressors already present in everyday life. It can take a toll on the borrower's emotional and mental state. But there are times when owing money cannot be avoided especially during emergency situations. Opting for a short term loan allows the borrower to pay off the debt quicker -- thus, less stress and burden.
Lower Total Interest
Interest rate for a short term loan may appear higher however, the longer the loan tenure is, the more interest the borrower has to pay over time. As short term loans are usually paid off within a year, interest will not build up much resulting to less accrued interest and more money saved compared to the lengthier term loans.
Opportunity for Better Credit Standing
Given the nature of shorter period, less loan amount, and faster processing time, there is less risk that a borrower's ability to pay off the debt in a short term loan will change from the time it was approved. Thus, acquiring a short term loan can be a good strategy to build a person's credit standing. This is, of course, provided that the loan will be paid off in a timely manner. This will also enable the borrower to have a good chance of being granted bigger loans in the future if the need arises.
