Short-term loans are known for their easy availability. These loans are usually very easily and quickly accessible. The entire process of application, approval, and disbursal of such loans happens in much less time than conventional long-term loans.
Short-Term Loans: Features And Facts To Know
The Definition Of Short-Term Loans
Short-term loans basically refer to the kind of loans which can be obtained for a brief period. Usually, the tenure is less than a year, while it can also be a few months or even weeks. Such loans are primarily obtained to support emergency or temporary personal needs. However, such loans are also available for businesses to fulfil emergency capital needs. You can also consider getting Cashify’s online short term loans. These types of loans are easy to pay and helpful.
Features And Facts About Short-Term Loans
Short-term loans generally require minimal or no collateral, which makes them a popular and attractive type of loan. Along with that, these are easily accessible and are also quickly approved and disbursed, making them a good choice for temporary or emergency personal or business needs.
While these loans are famous for the points mentioned above and their convenience, short-term loans generally have high-interest rates and might also come with steep processing fees depending on the provider.
That being said, short-term loans must be approached with caution. This is because it is a type of credit that involves repayment of the principal amount along with interest within a concise due date. This due date is usually within a year of getting the loan; however, the repayment tenure can also be just a few weeks.
Short-term loans get the name simply because they need to be paid off quickly. Most of these loans are to be paid off within six months to one year or, at most, 18 months. A loan having a tenure longer than that would be a medium-term or long-term loan.
Long-term loans can have a tenure of one year to up to 25 years. There are certain short-term loans that do not have a specified payment schedule or even a specific due date. Such loans may allow the borrower to repay the loan at their speed.
Types of Short-Term Loans
Short-term loans are available in different forms. Here are the most common types of short-term loans available both for personal and business purposes.
Merchant Cash Advance
This type of short-term loan is like a cash advance but operates like a loan. The lender provides the loan to the borrower, and the borrower makes the loan payments to the lender, accessing the borrower’s credit facility.
Lines Of Credit
This is more like a business credit card. The business can use it as per their credit balance.
Payday loans are a kind of short-term emergency loans that are very easy to obtain. Repayments come from the borrower’s bank account.
Other kinds of short-term loans include:
- Online or instalment loans
- Invoice financing
That brings us to the end of this article, and we hope you know all you need to know about short-term loans. So if you need this type of loan, make sure you make a wise decision.