The 3 Crucial Differences between Short Term Loans and Long Term LoansBefore you make the mistake of thinking that borrowing money will never work for you, you need to know more about short term loans. When people think about loans they tend to think about long term loans. But, there is an alternative: the short term loan. Before you dismiss a loan outright as something you can’t afford or that will keep you in debt for too long and hurt your credit score, consider these important differences between traditional long term loans and alternative short term loans.
1. Short term loans may last for just a week or two, so you won’t be in debt forever
The most important thing you need to know about short term loans, and what makes them different from long term loans, is exactly what the names of these loans describe: the actual duration of the loan is very short. With long term loans, typically loans from a bank, you hold on to the debt and make small repayments while also paying interest over a long period of time, from months to years. With short term loans, you get the cash and repay it within about a week or maybe two. With these loans you will not be in debt for months. You will have a reasonable time period to use the cash and repay it so that you don’t struggle with debt repayments for a long time.
2. Short term loans are typically smaller and more manageable than long term loans
Not only are short term loans of a shorter duration, but they are also smaller in total amount. A long term loan could be thousands of dollars or even hundreds of thousands. A short term loan is more typically a few hundred to a thousand dollars. This is a crucial difference because many people only need to borrow a little bit. They think they can’t get a loan because they are all large amounts. This isn’t true, though. With short term loans you actually can get a smaller loan. With a smaller loan you get just what you need and don’t have to deal with trying to repay a big loan.
3. Short term loans are much easier to get approved for than long term loans
For practical reasons this may be the most important difference between the two types of loans. Sure, it’s nice to have a loan that is smaller and with a shorter term, but if you can’t even get approved for a loan none of that matters. This is big difference, that you can much more easily get approved for short term loans than long term loans. You don’t have to have a high credit score, for instance, with short term loans. All you really need to show is that you have a regular paycheck. There may be a time for longer term loans in your life, but for these three reasons, a short term loan may just make more sense for your needs.
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