Top 7 Advantages of Short Term Loan
The word “short terms loans” is increasingly becoming very popular among the users. People do face financial emergencies in their life as they may need funds periodically.
For example, an unforeseen medical expenditure can create lots of problems in the long run. Therefore, immediate cash is required to ward off the crisis. In such cases, loans for a smaller time frame can do a whirl of good to the users.
Although people have to pay large monthly installments in the short term loan, but on the other part, they do not need to bear the interest for a longer time.
Advantages of short term loan:
Long term loan means long tenure and it is proved to be a problem for the borrower. For short term duration, you do not have pay lot of money as the principle has to be paid quickly.
Even short term loan can charge you less interest and you can easily close the loan within one year. You do not need to beat the long term interest and you can save your amount.
- Low interest rate
Low interest rates are not offered under the short term loan scheme however some lenders may provide the same if a secured asset is available to the users. Therefore, you must pay less both in terms of interest rates and time duration.
- Predictability
Nobody knows what would happen after 10 years and you cannot predict the changes of the state of the economy of the country.
Moreover, if you have taken loan on a floating rate of interest, it means that monthly installments may increase if the money supply is short. Hence, it is far easier to predict the budget requirements from short term perspective.
- Lower stress for the people
Since the repayment duration is only for a short time, people do not have to go through the emotional stress to repay off the debts.
Long term loans can take a heavy toll on the health of the individuals if they suddenly loose job or are under financial strain.
Apart from that, after death of the borrower, the guarantor need to repay the loan, and if you take the long-term loan then it could be a burden for your family after your death.
- Boosting the credit rating
One of the most important aspects of the short term loan is that its repayment would go a long way in boosting the credit rating to a great extent.
If you are taking the mortgage loan only for 3 to 5 years, it means that the home equity would increase at a faster rate.
- Without collateral
Many short term loans are disbursed without any collateral by the lenders as they use only higher credit rating and you do not need to submit many documents to borrow the short term loan.
Apart from that, lender can also provide unsecured short term loan and you do not need to provide any asset to the lenders as security.
- Bad loans
Borrowers suffering from bad loan issue can avail short term finances and repay it promptly to boost their credit score. It goes a long way in improving the finances of individual and get long term housing loan.
- Emergency expenses
What would you do if the automobile met with accident and requires repairing? Short term loan in such instances is a god send opportunity for the borrowers.
They can take the money and accomplish the task. A quick repayment is required to ensure that the credit history remains intact for a very long period.
You can find the right lender by browsing through the online websites. There are many options however you can get added recommendations from the colleagues and friends who have recently availed the services.
Category: Loans
