What is a Short-Term Loan?
A short-term loan is a type of personal loan for people who need cash quickly. There are many types of short-term loans, and they are usually used for emergency needs like unexpected medical bills, home repairs, car repairs, and more. These types of loans usually have a maximum lending amount of anywhere from $1,000 to $15,000. The repayment term is usually around 12 months or less, and the interest rates are higher than other types of loans.
Types of Short-Term Loans
Short-term loans come in a variety of options. Each type has different benefits and can be best for certain circumstances. Here are a few examples of short-term loans:
Online Installment Loans
Online Installment loans are a very cost-efficient way to get money for those who need cash quick, and would like to have easy monthly payments to pay off the loan over time. Generally this allows a borrower to recover from a short-term emergency.
Payday loans are ideal for those who need quick cash, but have poor credit. A payday loan is usually an unsecured loan with higher interest rates to compensate for the risk involved. Payday loans usually require proof of employment.
Emergency Cash Loans
An emergency cash loan is often used for unforeseen costs like medical bills and repairs. They can be found through a bank or credit union.
Credit Card Cash Advance
Credit card companies offer short-term cash loans through the bank or ATM. This is a quick and convenient option, but comes at a high interest rate. There may also be cash advance fees that increase depending on the amount borrowed.
Reasons to Get a Short-Term Loan
Short-term loans have many benefits, including the ease and speed of getting the cash into a bank account. These loans have flexible payback options and are unsecured, so almost anyone with proof of employment can qualify for this type of loan — even with poor credit.