Short term loans have received a lot of attention in the recent past because of their convenience. However, you should only go for a short term loan after careful consideration. In other words, it is always better to have a clear understanding of how the entire process associated with short term loans online work. This will assist you to stay away from hassle until you settle the obtained loan amount.
What exactly is a short term loan?
A short term loan can simply be defined as a short term, small sum loan, which needs to be settled within a relatively short duration of time. The duration associated with a short term loan would usually be from 3 months to 18 months. It is possible to extend the settlement duration of the short term loan, under certain conditions. Extending the settlement duration can increase the interest amount as well.
Is short term loan the same as cash advance loan?
Most people prefer short term loans as cash advance loans. However, there is a significant difference between these two types of loans. The cash advance loans are generally taken through a personal account or credit card. Or else, they are allowed by the employer.
How much can you get as the loan amount?
The loan amount you can borrow depends on several factors. They include your income, the lender you select and the locality of yours. For example, the amount you can obtain through short term loans is limited in some of the states. The lender would analyze these requirements in detail and provide you with information related to the maximum amount that can be borrowed.
Who can obtain a short term loan?
You will have to fulfill certain criteria in order to obtain a short term loan. These criteria are defined and governed by the laws related to short term loans. You will need to be a citizen in the United States of America and be at least 18 years old. You should also be employed and receive a monthly income of at least $1,000.
What do you need to obtain a short term loan?
You will need to have a valid form of identification in order to obtain a short term loan. In addition, you need to be equipped with relevant documents to prove your income and pay period. You should also have an active and valid checking account.
How fast can you get the money to your hand?
In most of the cases, you will be able to receive the cash check to your hand or bank account within the same day of approval. Or else, you will be able to get it deposited on the following day. As a result, many people tend to obtain short term loans for emergency cash requirements.
How do you get the money?
If you go to a physical store in order to obtain the short term loan, you will be provided with a check. The online lenders would take necessary measures to deposit the money directly to your bank account. I that kind of a situation, the loan amount will be deducted automatically from your bank account along with the interest.
What are the prominent differences between short term loans and long term loans?
When you are about to obtain short term loans, you need to have a basic understanding of the differences that exist in between them and long term loans. This can help you to make an informed decision as well.
The following are some of the most prominent benefits associated with short term loans and long term loans.
Eligibility requirements
Eligibility requirements associated with short term loans are quite less when compared to long term loans. That’s because the lenders are facing a high-risk factor when offering long term loans. The lenders should make sure that borrowers would make repayments in a timely manner for a longer duration of time. That’s why the eligibility requirements linked with long term loans are higher when compared to short term loans. Hence, obtaining a short term loan is a relatively easy thing to do.
Loan amount
The loan amount that you can borrow from short term loans is quite limited. In other words, the amount will be between $2,500 to $25,000. According to statistical information, it has been identified that the average short term loan amount that people borrow is around $20,000.
When it comes to long term loans, you are provided with the chance to borrow in between $5,000 to $500,000. The average SBA loan amount is around $417,000. Depending on the amount of money you need, you need to determine whether you are going for a short term loan or a long term loan.
Cost of the loan
At the time of getting a loan, you need to pay more attention to the cost of it as well. The short term loan process is less complicated. Therefore, you will have to pay less on administrative costs. However, the interest rates would be higher when compared to the long term loans. When you try short term loans, you will also be able to get money deposited to your bank account within just one day.
Based on these factors, you can easily figure out whether you are going for a short term loan or a long term loan.
