5 Benefits of Short-Term Financing

According to statistics, 41% of people in the US are forced to live paycheck to paycheck. 

One of the reasons for this is the current inflation rate. It’s a notorious fact that salaries don’t keep up with inflation, even in times of economic prosperity. 

With inflation reaching a 40-year high in 2022, most people are feeling the pinch and struggling to make ends meet. 

During times like this, short-term financing can be an invaluable safe stop. If you’ve been hit with an unforeseen financial emergency, short-term loans can be a better option than something like a personal loan. 

Curious to know why? Keep reading to discover the 5 top benefits of short-term financing. 

1. Short-Term Financing Is Convenient to Apply For

One of the benefits of short-term financing is that it’s easy to apply for. 

For long-term financing options, such as a personal loan, you typically have to go through a traditional bank or financial institution. Application processes are usually long and drawn out. You may have to supply extensive documentation and wait weeks for approval. 

If your bank doesn’t offer a streamlined online application process, you might also have to carve out time in your schedule to visit a branch during working hours. 

In contrast, short-term financing is much easier to apply for. Instead of having to jump through hoops to get approved, most providers allow you to fill out a simple application form online. 

If you’re in a situation where you need quick access to cash—such as a medical emergency—the last thing you can afford is to get embroiled in a drawn-out loan application process with your bank. 

2. Short Term Loans Offer Fast Financing

Not only are short-term loans easy to apply for, but they also offer fast turnaround times. 

Unlike traditional loans and lines of credit, short-term loan application approval processes are usually automated. Instead of having to wait for someone to manually look over your application, you can rest assured that your application is being automatically checked by the system. 

Most short-term financing providers implement solutions to automate the entire application, underwriting, and funding process. Thanks to this, you can get paid out at lightning speed, without being subject to the delays that come with manual approval processes. 

Depending on the loan provider you choose, you could get access to your loan amount within days or hours. 

3. Short-Term Loans Can Help You Out of an Unforeseen Cash Crunch

Emergencies can hit out of nowhere, and when they do, you need to be able to leverage fast, easy credit solutions that won’t drain your time or energy.

Often, financial emergencies don’t require large sums. Something like unforeseen medical bills or emergency vehicle repairs don’t usually cost thousands of dollars. 

Statistics show that 56% of Americans can’t afford a $1,000 emergency. This is understandable, given the rising cost of living and the margin by which salaries are lagging behind. 

However, most banks don’t cater to these kinds of credit needs. 

If you need a small, fast loan, with short repayment terms, you might be hard-pressed to get it from your bank. 

Short-term loans bridge this gap. If you need a fast loan for bills, a short-term loan from an independent credit supplier can be the ideal solution. 

As we said above, approval processes are convenient, fast, and efficient. If you need a small amount of money quickly, you can have it deposited into your bank account within hours, all from the comfort of your home. 

If you’re facing an unforeseen emergency that’s going to cost you more cash than you have on hand, a short-term loan can take the stress out of the situation. It can also prevent you from defaulting on other loan payments or falling behind on your mortgage. 

4. Short Repayment Terms Can Trigger Less Interest

Short-term loans can sometimes attract a higher rate of interest than something like a personal loan. However, thanks to their short repayment terms, they can actually save you in interest over the lifetime of the loan. 

There are two reasons for this. Firstly, short-term loans and payday loans usually have a fairly low amount limit. Unless you’re a very high earner, you can’t borrow thousands of dollars with a payday loan. 

Personal loans, on the other hand, usually allow you to borrow higher amounts. 

If your bank is offering you more credit than you need, it can be very tempting to say yes to the maximum loan amount. If you do, you’ll have more to pay back, and you may also pay more in interest over the lifetime of the loan. 

For instance, let’s say you take out a $10,000 personal loan when you actually only need half that amount. At an average interest rate of 11% and 24-month terms, you’ll wind up paying over $2,200 in interest. 

On the other hand, let’s say you opt for a short-term loan that only allows you to borrow $5,000 at a fixed interest rate of 13% with 6 months to pay it back. With this option, you’ll pay around $325 in interest. 

5. Short-Term Loans Don’t Saddle You With Long-Term Debt Repayments

Another advantage of short-term loans is that they don’t burden you will long-term debt repayments. If you’re in a crunch for cash, the best solution is to borrow what you need to navigate the crisis, and then pay it back as soon as possible.

The faster you pay back a loan, the less interest you’ll accrue, and the sooner you’ll get out of debt.

Doubling down for a few months to pay off a short-term loan might mean you have to make some household economies and sacrifices, but it’s a lot better than having to spend a part of your paycheck every month on a debt that’s going to run over multiple years. 

Are You in Need of Short-Term Financing?

If you’re in need of quick cash to cover an emergency, short-term financing could be the best solution. Unlike a personal loan, short-term loans are fast and convenient to apply for and you can have the cash in your account within hours.

The short repayment terms also ensure that you pay off your credit quickly, get out of debt in the shortest time possible, and potentially pay less interest. 

Looking for short-term loan options? We have you covered. 

To compare quotes, simply fill out our simple form process to get matched with the best short-term loan for your needs.