A short-term loan is a personal loan that usually has a shorter repayment period than other
types. Short-term loans can be used to cover expenses such as medical bills, car repairs,
and home emergencies. For more information on what you need to know about this type of
loan, continue reading our blog.
Sources of Short-Term Loans
Whether you're looking for a short-term loan to cover your next car payment or want to
borrow money for that vacation you've been planning since the end of last year, there are
plenty of sources out there.
However, it can be difficult sorting through all the different options and picking one that's
best suited to your needs. Here are some common sources of short-term loans:
● Lines of credit.
● Selling goods on instalment
● Overdraft agreements.
● Accounts receivable financing.
● Payday loans.
● Merchant cash advances.
● Invoice financing.
● Overdraft agreements.
● Customer advances.
Advantages of Short-term Loans
The advantages of short-term loans include quick approval time and competitive pricing
among lenders. Another advantage is that this type of loan does not require collateral or
credit checks as many other loans do.
Short-term lending is also beneficial because it allows borrowers to pay off their loan with
instalments rather than one lump sum payment at the end.
Disadvantages of Shot-term Loans
Short-term loans are convenient, but they come with several disadvantages. For example,
the interest rates for these loans are typically far higher than those associated with other
loan options.
Additionally, it can be difficult to qualify for short-term loans because credit scores are taken
into account. These short-term loans may seem like good solutions to financial emergencies
at first glance, but in reality, they can do more damage than good if used incorrectly or
without planning.
Bottom Line
A short-term loan is a personal finance option that can be used to cover any number of
expenses. If you're thinking about applying for one, consider the following points before
taking out this type of loan. You may find these things helpful as you determine if it's right for
your situation.
