There will be times in everyone’s life when they struggle to manage their finances, and sometimes the only option is to look at taking out a loan. There are many different types of loan too. From payday loans to short term loans, there are options for all. Short term loans are one of the most popular types of finance that people take out, and for good reason. So, keep reading and discover 3 benefits of a short term loan.
1. Less Time To Accrue Interest
Whenever you take out a loan, you’ll be hit by interest rates. These are determined by the Bank of England and the lender, and they will have an impact on how much money you pay back. The longer the term of your loan, the more interest you’ll accrue. This in turn then means that you’ll pay back a lot more than you originally borrowed. However, when you take out a short term loan, there’s much less time for the interest to accrue. This means that you’ll pay back a lot less than you would have a longer term. Many people prefer to have a short term loan for this reason alone, as it allows you to clear up your debt a whole lot quicker.
2. Receive The Full Amount Upfront
When you take out a short term loan, you’ll be able to receive the full amount of your loan upfront. However, a long term loan might not allow you to do so, which can make it more difficult for you to access the funds you need. This is normally because a long term loan is for a larger amount of money, so splitting it up into different terms is the way a lot of lenders work to ensure that they get some of their money back before lending out more. So, if you need all of your requested amounts as soon as possible, then a short term loan can work out much better for you.
3. Fewer Repayments
Finally, a short term loan has way fewer repayments than a long term one. This means that you can keep the amount of time you’re in debt to a minimum and save money in the long run. It’s much better to get it all paid off sooner rather than later, as you won’t have to keep factoring it all into your budget each month. While you may have slightly higher repayments, they’re for a much shorter period of time. This can really help you to keep your debt and outgoings to a minimum, as the term will be over a lot sooner.
Short term loans have lots of benefits, and these three are just the tip of the iceberg. From fewer repayments to less interest on your total repayable amount, there’s so much that short term loans can do better than longer term ones. So, if you’re ever in a financial emergency and are thinking about taking out a loan, be sure to think about these three benefits first. You may realize that a short term one could work out better for you financially!