Even if you are a good saver who’s careful with their money, an unexpected incident can leave you in a tough financial position.
Accidents can happen, and they may leave you needing quick access to short term cash cash. Short term loans can give you the fast cash needed to handle emergencies and other immediate financing needs or take advantage of a new business opportunity.
Here is what you need to know about short-term loans. Read this article carefully before filling any form and signing up for a short term loan.
Let’s start with studying the characteristics of a short term loan.
Short term loans are called short-term because they need to be paid within a tenure of six months to a year and a half. They give you quick access to cash, don’t usually require any collateral for approval, have a quick application process and a wide range of uses.
Merchant Cash Advances
This type of short-term loan is a business cash advance. The lender lends a certain amount needed by the borrower. No tenure is usually set for repayment.
The borrower allows the lender access to their credit facility, so each time a customer of the former makes a transaction, some amount of the sale is taken by the latter. This process continues until the lender receives full payment through such deals.
Lines Of Credit
A line of credit functions similarly like a business credit card. The lender offers a set credit card limit, and the borrower can draw money as required; of course, keeping in mind the limit.
The amount that has been borrowed must be paid in monthly instalments — that vary on the line of credit that has been accessed.
The only difference such types of loans have from credit cards is that the former charge a lower annual percentage rate.
In this world of digital advancements, instalment loans or online loans are a type of fast loans online. They are offered to make borrowing easier for the borrower.
Such loans have easy approval. Within minutes of filling the form online, you get the approval, and money at the comfort of your own home or office or wherever.
These loans have an average interest rate and must be paid back in a specified span of instalments.
This is a type of business loan borrowed when a cash flow crunch tends to affect the running operations.
The lender takes into account the invoices yet to be paid by the customers of the borrowers, and based on that he lends an amount with a low-interest rate. The interest usually varies on the time taken by the customer to make the payment.
Once the business receives the payment, the lender takes the interest charged on loan and returns the remaining amount to the borrower.
Logbook loans have gained immense popularity in Australia and the UK.
In such loans, the borrower transfers the ownership of their vehicle to the lender as security for the loan. Even after receiving the money from the lender, the borrower gets to use their vehicle.
In return, they have to repay the loan in monthly instalments within a tenure of twelve months. Once the complete payment is made, the ownership of the vehicle is transferred back to the borrower.
Short-term loans offer great opportunities for businesses and individuals both.
For individuals, such loans can be useful in emergencies and for some businesses such loans can resolve a cash emergency.