Short Term Loans

Short term loans are a general term used for finance agreements that are designed to be repaid over a relatively short period of time. Although commonly confused with payday loans, they are not synonymous with each other. Payday loans are a type of short term loans but a short term loan is not necessarily a payday loan.
Usually, short term loan repayments are made over a period of one to three months, although some companies may extend up to six months to a year. Borrowers may also choose to pay off the loan in full if it is within their means, but they are not “required” to do so unlike with payday loans, wherein the interests roll over the next payday if the borrower misses the repayment. This is a common problem that payday loan borrowers face, because usually a month is simply too short to afford one, lump sum repayment. With short term loans, you are given sufficient time to pay off your debt, but not too long enough to make it very expensive.
Short Term Loan Advantages

  • Easy application, which is done online.
  • Freedom to use the money in any way you like.
  • Few paperwork and easy requirements.
  • Money is available within a few hours.
  • There’s a chance to repair your credit over time, as you make your repayments in a timely manner.
  • Cheaper than payday loans.
  • Flexible repayment options. Unlike payday loans, you don’t have to make one lump sum payment on the next payday.
  • No collateral or guarantor necessary.

Short Term Loan Disadvantages

  • Limited borrowing amount, especially if you’re a first time borrower.
  • Can ruin your credit score even further if you default or are late on your payments.
  • Can become very expensive if you pay late, borrow more money, or extend your term.
  • If you want a loan that is repayable over a period of one and three years or more, then this is not for you.
  • There are credit checks and affordability checks, although many lenders accept borrowers with bad credit, but their borrowing amount is much lower than standard and could be given high interest rates.