Want to meet your financial needs while keeping your debt to a minimum? If yes then short-term loans are a good way to achieve your objective. Short-term loans are something even credit counselors recommend. Why? Let’s take a look.
People utilize the aforementioned loans for a variety of reasons. The most obvious reason for anyone to obtain a short-term loan is minimizing the time they live under debt. Apart from forcing you to live under debt for most of your life, conventional or long-term loans make you pay back an amount which is significantly higher than the original loan amount. This is due to the interest involved in the loan: the longer you owe money to the lender, the more interest is added to your balance which of course means paying back a higher amount.
The best way to counter the aforementioned problem is a short-term loan. By allowing you to pay back everything quicker, a short-term loan minimizes the total time and amount of your debt including less accrued interest. You can save money in the long term even if the interest rate of the short-term loan is considerably higher than what you’d get with a conventional or long-term loan. There are a number of reasons to opt for a short-term loan. Following are some of those reasons.
Get money fast
Quick access to the money you need is what a short-term loan provides you. This is probably the biggest benefit of this type of loan. If you are in dire need of money and want to avoid a lengthy loan approval process then opting for a short-term loan is the best thing for you to do. By providing the money you need within a shorter time span than conventional or long-term loans, short-term loans allow you to get money fast. In fact, with some short-term loans, you can get access to cash within a few hours or the same day.
Collateral is required to secure a long-term loan. Usually, borrowers use their home as collateral to secure the loan. Unlike long-term loans, short-term loans do not require borrowers to provide collateral against the loan. Though they are legally binding and must be repaid, the aforementioned loans do not cause a loss of a home or other asset used as collateral when there is a default in their repayment. In short, short-term loans allow you to get the money you need without risking any of your belongings.
Ability to borrow with a poor credit score
The majority of the conventional or long-term loans won’t be available to you if you have a poor credit score. Even if you qualify for conventional or long-term loan with a poor credit score, the terms of the loan are likely to dissuade you. Fortunately, this doesn’t happen with a short-term loan. Even if you have a poor credit score, you can secure a short-term loan easily without any dissuading terms.
Avoid long-term stress
When choosing a long-term loan, many people tend to ignore the long-term effects of the loan. Long-term loans force to you to commit to something for a long period of time. Usually, longer duration loans intimidate borrowers and cause stress in them. Your financial standing in the distant future is something no one can accurately estimate. Also, saying for certain what the economy will look like ten or twenty years from now is not possible. Regardless of what your financial situation is and what the economy looks like, you’ll still be responsible for payments ten or twenty years from now if you obtain a long-term loan. A short-term loan is the best way to obtain the money you need if you want to avoid long-term problems and stress.
Depending on where you obtain it from, a short-term loan may or may not result in all of the aforementioned benefits. If you want to know more about short-term loans, contact a credit counselor today.