Loans like the short term and the long term have a league of advantages and disadvantages, and most of these depend on the requirements of individual borrowers. Both types of loans provide legitimate access to financial route, but each one has their respective alcove and function. Knowledge on these loans will create a notable difference as the borrowers can make the right decision at right point of time. Moreover, it is going to be useful to save capital for personal purpose and help in the financial growth.
Insight on Merits and Demerits
Long term loans are paid off in small amounts, with time extending to long periods. In most cases, this time period can range from a few months to more than two decades. These loans are processed by traditional banking sectors, financial institutions as well as credit lending agencies, with an essentiality of full financial background analysis. In addition, this financing offer has a very cumbersome process, and this is time-consuming. Here again, you need to check with the credible broker.
Long term loans comprise mortgage payments, school loans, and vehicle loans, providing a considerable amount of money that is easily repaid over a period of time. Besides, the interest rate and fees associated with such loans, which is directly proportional to credit approval, work history, assets and several inter-connected factors. Affordable interest rates are only possible in case the credit history of the prospective borrower is impressive and he or she has the stable employment.
One of the major drawbacks associated with long-term financing is that the application processing is time-consuming, and most often, has to be supported with comprehensive documentation and paperwork. There is also need for the guarantor at the time of applying, especially since there is an unstable economic environment.
Short term loans, also known as payday loans aim at providing quick cash to the borrowers. These loans are functionally opposite of the long-term loans. The process of filing an application is simple, lucid and less time consuming. The lender offering this type of loan product is interested in knowing about your income, the nature of job, and the bank account. This type of financing is for the limited period, and therefore quickly repaid.
Approval of short term loans doesn’t need any credit check or any potential customer. The entire process of application will be over before you could ever think. The credit is available for the disbursal on the same day. The repayments are also gradual and quite objective in nature.
Short term loans or the long term loans; making the right choice, always matters. The differentiation between financing is in the manner the available credit is put to use and the time frame for repayment.