What is Short Term Loan: Loans are essentially financial instruments that bridge the gap between your current financial capabilities and financial goals. Your financial goals can be differentiated based on the time, urgency, funds, level of importance, etc. Basically, loans can be categorized into two parts i.e. short term loan and long-term loans. These loans differ based on the interest rates, registration process and repayment tenures.
What is Short Term Loan?
A short term loan is a type of loan that is obtained for a temporary financial need or even a small business expense. These loans provide quick cash when you are short on cash flow. These loans have shorter repayment periods than traditional loans and are a great option for small businesses that are not eligible to apply for a line of credit from a bank. In most of the cases, these loans need to be paid off within a year.
Benefits of Short-Term Loans
The following are some of the benefits of Short-Term Loans –
1. Shorter Approval Process:- Generally, Short Term Loans have a quick approval process. As the amounts are small and the duration is brief, the requirements for such loans are basic. The loans can be processed quickly with the minimum documentation.
2.Quick and Hassle-Free Repayment:- Usually, these loans are taken for a temporary financial need or even a small business expense, so the loan amount is usually small and manageable. So, it is easier to set a repayment schedule. These loans need to be paid off within a year, so there are lower total interest payments compared to long term loans.
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3. Upgrade Your Credit Score:- These loans help you to earn a good credit score history that can come in handy if and when you take a long term personal loan in the future. Hence, if you want to lend big amount for buying own house, you can start by taking short-term loans.
4. Quick Funding Time:- These loans are considered less risky than long-term loans because of a shorter maturity date. The borrower’s ability to repay the loan is unlikely to change significantly over a short period of time. Thus, the lender can grab the needed funds more quickly.
5. Easier to Earn:- You can obtained such loans with the minimum documentation. The requirements for such loans are basic. Usually, such loans are obtained for a temporary financial need or even a small business expense who suffer from less than stellar credit scores.