People need short term personal loans to get immediate cash. The loan is in short amount which can be paid off easily and quickly. Short term personal loans are provided by many institutions. The terms and conditions may vary from each other.
People take personal loans for many reasons. There are two main types of short term personal loans.
- Secured loans
- Unsecured loans
But these types have higher interest rates than long term loans.
- Secured loans:
Secured loans, as the name suggests, have less risk for financial companies because the loan borrower puts some asset as guarantee to get the loan. If the borrower fails to pay back loan, the creditor or money lender can take over the asset to recover the debt. By putting up an asset with benefit to the borrower in having less interest rate and the money lender will be comfortable to lend you the money even if you have poor credit.
- Unsecured loans:
Some people do not own anything or are not willing to put their assets as collateral. They are eligible for unsecured loans. Some home owners do not want to risk their asset as there is no guarantee or collateral, the bank can charge high interest rate on unsecured loans.
There are some fees and penalties associated with the loans. Unsecured loans also benefit the people with poor credit score. They can use the loans to pay back their credit on time which will improve their credit score.
Short term personal loans have their benefits as well as some drawbacks. The benefits are that you can get money very quickly in case of any emergency. It is quicker than other lengthy loan approval procedures. You can get a personal loan without risking your property as collateral because in case of default on the loan, the bank can take over your property to refund the debt. As it is a short term loan, you do not have to worry about it for many years. Pay off your loan as quickly as you can in short period of time. You can find flexible terms and conditions to pay off your loan easily. The drawbacks are high interest rate that will add to the amount of loan, making it difficult for you to pay back. It will be a burden on the budget making it more difficult to pay back the loan. This complicates the situation by getting them indulged in debt. You can get short term personal loans from banks directly or online. The banks offer you an option to pay back the loan sooner to save the interest costs. You can also take a month off from regular loan payments. In short, short term personal loans give you more benefits than drawbacks.