Consumers in the US have a total personal loan debt of $177.9 billion.
If you’re thinking about taking out a loan, it’s important to know what it involves, and when you should do so. Short-term loans are becoming increasingly popular due to being easily accessible and providing quick funds to borrowers.
For a rundown of what a short-term loan is, and when you should get one, keep reading.
A short-term loan is generally used to support a temporary need, be it business, or personal. It’s a type of credit, and as such, it involves repaying the loan with interest by a pre-determined date. This is often within 1 year of the loan being granted.
Short-term loans are commonly used by people when starting up a new business. This gives them access to the funds (or a portion of the funds) they need to get off of the ground.
These generally have smaller loan amounts than a loan from a bank – at Fast Loan Direct, we offer short-term loans from $100-$35,000. People may also get short-term loans for personal needs when running into unexpected cash flow issues.
A long-term loan can last for anywhere from 1 to 25 years, whereas a short-term loan will typically need to be paid off in less than a year, but will sometimes be a bit longer.
There are various types of short-term loans available. The type that would be best for you will depend on your needs.
This is technically a cash advance that works similarly to a loan. The lender will loan you the amount you need, and you’ll make payments by giving the lender access to your credit facility. Every time you make a purchase, a portion of the proceeds will go back to the lender, eventually repaying the loan.
For this, a credit limit is set, and you can access the credit line as needed. Each month payments are made based on the amount borrowed. These payments will vary depending on how much of the credit line has been accessed.
This is similar to how business credit cards work. The main advantage here is that the APR (annual percentage rate) will generally be lower than that of a business credit card.
Payday loans are easy to obtain and are most commonly used for quick access to funds in an emergency situation. These are very easy to obtain, and almost anyone can get them. Bear in mind that these tend to have quite high-interest rates, and the entire repayment must be one lump sum.
Another option that’s easy to obtain, and is often granted in just minutes. This process typically just involves filling out an online form, and the money is then transferred to your bank account.
Invoice financing works using a business’ accounts receivables. The loan is based on outstanding customer invoices. Interest rates will depend on how many weeks invoices remain unpaid.
As invoices are paid, the lender interrupts payments. After taking the interest charge the remaining funds due will be passed on to your business.
Sometimes long-term loans are the better choice, and in other cases, short-term loans are more suitable. There are several advantages to short-term loans that make them the better choice in certain circumstances.
The main downside of most loans is the interest. The longer you have a loan, the more interest will accrue, so having a loan that is paid off quickly will keep the overall interest you have to pay to a minimum. At Fast Loan Direct, we offer lending periods between 60 days and 72 months.
People often take out short-term loans when they need a quick solution. This is because they can generally be reviewed and approved very quickly. In many cases, you will be able to access the funds within just a few days of applying for a short-term loan.
Long-term loans have much longer processing times, and you may have to wait several weeks before being able to access funds.
The shorter processing time comes down to various factors. One of them is that there are far fewer checks.
For long-term loans, banks will generally conduct a credit check, for example. This can take a while, and if your credit score isn’t high enough you may not be approved for the loan. Short-term loans are far more accessible, and almost anyone can get one without difficulty.
The requirements for loans vary depending on various factors. For short-term loans, the requirements are generally not as stringent as they are for long-term loans.
Some lenders may require a good credit score (above 700) but many don’t require credit checks at all for short-term loans. This means someone with a bad credit score (or even no credit score) can generally get a short-term loan.
One of the main requirements is verifiable income. This is to assure the lender that you’ll be able to pay the loan back. Aside from this, typical requirements include things like being a US resident and having a US bank account.
When looking at loans, the type you should get will depend on your circumstances and your needs. A short-term loan is most suitable if you need to get access to funds very quickly, or if you want a loan that you can pay off in a short timeframe. Short-term loans can also be the best solution if you have a low credit score as you’re more likely to be eligible.
At Fast Loan Direct, you can quickly and easily apply for a loan for anywhere between $100 and $35,000. Click here to get started with your application today.