What are the advantages of short-term loans?
Short term loans, as you would have guessed, are just that: loans lent for a short period. The repayment period is relatively shorter than conventional loans and can range from a few days to a few weeks or months. Short term loans are designed to benefit borrowers who need urgent money. Financial emergency, either in the form of medical expenses, car repairs, housing rent, travel plans, or anything that fits the description of an emergency overhead.
There are many advantages to availing a short-term loan, and the following points will help you understand the benefits of choosing a short-term loan over a traditional borrowing.
•Faster Approvals and Disbursements
Short-term loans, like payday loans, are hassle-free with quick turnaround time. It takes very little for anyone to qualify for a short-term loan, and the approval requirements are minimal. These loans can be applied online by filling out a short form; eligibility check and approval are almost instantaneous, unlike conventional loans that require tons of paperwork and weeks of waiting to secure approval. Once approved, these loans are usually disbursed on the same day, and you can expect the money in your account within a couple of hours, making them a great choice for emergency funding.
•Lower Interest Rates
A primary principle of lending and borrowing is that the more the repayment term, the higher the interest you end up paying. Since the repayment term for a short-term loan is a few months or less, the interest amount shrinks. Also, even if the interest rate is higher than traditional loans, you end up paying significantly lesser over time.
•Improved Credit Ratings
To avail more substantial credits and financing, solid credit history is essential. Short-term loans, with their shorter payback periods, are an excellent way of boosting your credit score by paying off the loan on time. Higher credit scores can serve great benefits to smaller businesses and help them avail higher lines of credit by securing and paying off short-term loans on time.
•Bad Credit Scores Are Not a Deterrence
Emergency expenses do not chase people only with great credit scores; people with bad credit history also need to borrow. Short-term loans, with their non-discriminatory policy against people with bad credit scores, do not reject loans based on their credit profile. Short-term loans are real saviors for people with adverse credit profile trapped in a financial quandary.
•They are Unsecured Loans
Short-term loans are unsecured loans that require no collateral to be pledged on the part of the borrower. Thus, they spare the borrower of having to come up with a sizeable mortgage to secure funding during an emergency.
•Flexible Payback Terms
Short-term loans are available for shorter terms with highly flexible repayment options; they take into consideration your current financial standing and ability to repay, to offer you the most relevant options for repaying the loan using the means available to you. Viable repayment terms and payback schedule ensure that the borrower can conveniently part with the installment amount without compromising on his basic needs.