If for any reason you are considering taking a loan, it is best if you check both your options, which are a short-term loan or a long-term loan. To help you understand what can be a more suitable option, here we have discussed both options in detail.
Before we begin, you must consider a few things beforehand. For instance, the amount you need, the time you need it for, the interest rate that you can afford, and how quickly will you be able to pay it back. Once you have made these decisions, selecting a loan type gets easier.
Short-term loans are usually taken for a short time, say up to 12 to 18 months. Depending on your situation, you can even take a short-term loan for weeks and not months.
There are many lenders in the market and a variety of short-term loans as well, therefore it is necessary to do some research before signing a contract.
Mostly you will get approval for your short-term loan within a few hours. Online lenders like loanpig.co.uk are pretty prompt about their procedures. They undertake a credit check via computer and thereby get results for the same in minutes.
Considering your credit history, they will give you options. After receiving approval, money is deposited in your account within a few hours.
Usually, the interest rate for short-term loans is lower. However, if you have a poor credit history, expect a higher interest rate.
Borrowers even consider obtaining a free credit record before beginning the application process. Consider doing so, and you will know where you stand.
Long-term loans are what most people opt for, one reason for this is they understand the concept of long-term loans better.
This is the type of loan, which is mostly offered by banks. As long as you have a regular income, clear credit history, and can afford the interest rate, long-term loans are good for you.
This type of loan is mostly offered for a term of more than a year. You can take several years to repay this loan in form of monthly installments.
Depending on your credit record, you can expect to get a loan of up to around £50,000. The interest rate will vary from lender to lender, so ensure doing enough research and compare a few options.
Benefits of a short-term loan
- The application procedure is very easy and quick.
- You get ample borrowing options.
- It is not a long-term commitment, and thus you get debt free in a few months.
- It is best for small businesses and start-ups.
Benefits of long-term loans
- The amount you can borrow in a long-term loan is bigger compared to that of a short-term loan.
- Interest rates are very competitive.
- Many lenders are available and thus many options are available
- Long-term loans are available to suit almost any type of credit profile.
Short-term vs long-term
It is usually not possible to conclude which loan is better. This is because depending on the borrower’s situation, one might fit better than another.
Generally speaking, a long-term loan is usually suitable for most borrowers, provided they meet the eligibility criteria. However, when you don’t meet the criteria, you can always opt for short-term loans.