Which is better: a short-term loan or a long-term loan? In many situations, a short-term loan is going to be a much better option for you. These loans are easier to obtain, you can get the money faster, and they offer a variety of other benefits you’ll want to be aware of. Consider the following benefits when deciding whether a short-term loan is the right option for you.
Easier to Obtain
Conventional loans are notoriously difficult to obtain. Applicants need to have an excellent credit score and need to show they have the ability to repay the loan over a period of many years. Short-term loans, however, are far easier to obtain.
According to carbonite.com, these loans have more relaxed eligibility requirements, which means they’re a great option if you cannot obtain a long-term loan or if you don’t have great credit. They aren’t as big of a risk for the lender, so the lender is often more willing to give you money even if you can’t meet the stringent requirements conventional loans have.
Less Paperwork to Do
With conventional loans, there’s tons of paperwork to fill out. Since the requirements are much lower for short-term loans, there isn’t as much paperwork to do. You’ll likely need to provide your bank statements for the past few months as well as fill out other standard documents, but you won’t need to fill out as many forms as you would with a conventional loan.
Get Approval Faster
Your approval is much faster when you apply for a short-term loan. With conventional loans, it’s possible you could wait more than 3 months to obtain the money you need if you’re approved. With a short-term loan, according to Cigno Business Solutions, you could have the money you need in as little as a few hours.
The loan application process for a short-term loan is not fully online, so you must enter a branch to sign the loan documents. However, even with this step, you’ll be approved as quickly as possible for a short-term loan so you don’t have to wait long to start using the money.
Pay Less Interest
Your interest rate might be a little bit higher with a short-term loan compared to interest rates for conventional loans. However, according to financetypes.net, you can still save some money. You’re paying everything back within a shorter time period, so you won’t make as many interest payments as you would with a conventional loan. This means you actually pay less in interest.
Paid Off Much Faster
When you obtain a conventional loan, you’ll likely spend years repaying the full loan. This is fine for mortgages, where you’re borrowing a huge amount of money. For smaller amounts, however, you’ll appreciate being able to repay the debt as quickly as possible. Instead of the possibility of paying on the loan for years, with short-term loans, you’ll be finished repaying the loan in 18 months or less.
These are just a few of the advantages of obtaining a short-term loan today. If you’re in need of extra money, make sure you look into your options for a short-term loan. This could make it easier for you to get the money you need right away and you could have everything repaid faster. Plus, it could make it easier for you to obtain loans in the future as you’ll have a history of timely payments.