Benefits Of Short Term Loans
Whenever a person decides to apply for a loan, he or she has to think over some of the factors which play a key role to finalize the type of loan. For instance, one has to decide first the amount of money he is willing to borrow as a loan and not to forget the interest rate that will be charged for that certain amount. Another important factor is the duration for the loan to be taken and paid back. For the same amount of money, if you opt for a short term loan, then you will have to pay back within a short time which also means that the monthly payments will be higher than that of a long-term loan. The thought of paying larger installments can be intimidating but in the long run, it will make a lot of sense to pay those large amounts for a short time and get rid of the loan at the earliest.
Why Choose a Short Term Loan?
Some of the positive aspects of taking up a short-term loan are mentioned below:
In a long term loan, more interest charges will be paid since it will continue for a longer duration. Whereas in a short term loan, you will clear the complete loan within a short period, hence interest charges will be less. Although interest rates are high for a short term loan but eventually you will be saving some money for sure.
Not necessarily all short term loans charge a high rate of interest. There are many mortgages which charge lower rates of interests. That means you will be able to save some money since you will be paying back in a short time that too with a low-interest rate. This can help you to clear your loan fast.
Future is very unpredictable and no one knows for certain what will be the economic situation after 20 or 30 years. On top of that, you cannot even estimate about your finances in the next few decades. So, in the case of a long-term loan, even if your financial situation is bad, you will be bound to pay back the loan. But it is still comparatively easier to plan your budget and predict the near future if you choose a short term loan.
To be under financial debt for a longer period can be very stressful. It can take a psychological and emotional toll. Better not to owe too much money for a longer duration. Thus, with a short term loan, one can pay off the loan real quick and set himself free from all burden. This is less stressful and even if you stress out, it is just for a short time.
You can improve your credit score real quick if you acquire a short term loan and pay it back within the time.
You can build a faster equity in your home if you go for a short term in the case of a mortgage loan.
Long term loans can take quite some time to complete the whole process of passing the loan. Whereas, short term loans are real quick and within few hours it is processed. Thus, if you have an emergency and you require money immediately then short term loan is the answer to your problem.
When you take a mortgage loan for building your house, unless the loan is cleared, you cannot rightfully own the house. So, better to pay back the principal at the earliest which is possible using a short term loan. This can help you to own your house fast. Also, if you want to sell the house, then you will have to share with your lender all the proceeds from the property sale.
If you have a bad credit history, then there is nothing to worry as many short term loan lenders are not bothered about your credit history. They are only concerned that you must have a steady income and should not have an outstanding loan. Also, they want you to hold an account in the bank. That’s the criteria for a borrower to fulfill. Hence, a lot of people who do not qualify for other loans can have some hope to fetch money with the help of such loans.