If you’re in need of money, you can borrow from an online lender that offers short-term loans. This type of loan is suitable for folks who need to borrow cash and are willing to repay it within a short period. 

Many lenders like Crediteck provide short-term loans to borrowers nowadays. You can get a short-term loan easily because lenders don’t impose stringent requirements, and some lenders allow online loan applications. The benefits of short-term loans indeed attract borrowers with urgent money needs. 

If you’re thinking of getting a short-term loan, it’s a must to get familiar with it first. Learn the different types of short-term loans, their benefits, and what you need to consider before applying for one. 

Short-Term Loan Benefits

Let’s tackle now what are the benefits that make short-term loans an attractive option for money borrowers. 

Minimal Risks

Short-term loans are less risky because you can pay your debt within a short period. Unlike installment loans that have terms of 5 to 30 years, short-term loans can be paid within just weeks or a few months. This feature prevents you from getting tied to your debt for a long time. 

If you’re sure that you can pay the loan at its maturity date, a short-term loan is a good option for you. Don’t get this loan if you don’t have a regular income because you might not pay what you owe in a short time. 

Very Accessible

Short-term loans are among the most accessible loans right now. For folks with urgent money needs, you can borrow a short-term loan even if your credit score is low. Just having regular employment can qualify you to obtain this loan. Some options also don’t require borrowers to furnish collateral against the loan to qualify for it. 

Moreover, many lenders allow online applications for short-term loans. It’s an advantage for borrowers because they won’t have to hassle themselves by going to the lender’s office. With loans online, you can also send your application just within minutes and get notified whether you’re qualified for the loan immediately. 

Good Option for Building Your Credit Score

There are borrowers whose goal is to build their credits. Getting a short-term loan is an excellent option for this purpose. Since you can pay this type of loan in a short period, it’s an easy stepping stone to build your credit as long as you pay the loan on its maturity date. 

Types of Short-Term Loans

You can choose from several types of short-term loans offered by lenders today. Here’s a rundown of the various types of short-term loans. 

Payday Loans

Payday loans are perhaps the most well-known short-term loan option. If you borrow this loan, you have to make a repayment by your next payday, typically in two weeks to one month. 

You can use a payday loan for your urgent expenses, such as paying for groceries or utility bills. But be careful of the high-interest rates of payday loans because they can throw you into a debt cycle. 

Lines of Credit

Lines of credit have a repayment term of a few months to one year. This type of short-term loan allows individuals and business entities to tap into a line of credit. The amount borrowed from the line of credit must be paid in monthly installment payments within the set repayment period. 

Invoice Financing

For business owners who need financing for their business operations, invoice financing is a good option. This allows business owners to use their account receivables to get loans from lenders. 

The lender will assess the amount due on invoices that your business issued to customers before the lender provides the money you need to borrow. You’re likely to get approved if you have a considerable amount of account receivables. The lender will collect your repayment when your customers paid the invoices. 

Merchant Cash Advances

A merchant cash advance allows business owners to borrow money from a lender by putting its credit facility as security. It operates by giving the lender access to the credit facility of the business. The lender will take a percentage of the proceeds every time a customer makes a purchase until the debt is paid in full. 

Bridge Loans

A bridge loan enables you to borrow money pending longer-term financing. You can obtain this loan if you need urgent cash for a property down payment or while waiting for cash inflows of your business. Bridge loans have terms ranging from 6 to 12 months. 

Takeaway

If you need a loan that you can repay within a short period, go for a short-term loan. This loan is less risky compared to longer-term loans. Plus, short-term loans are also accessible to borrowers nowadays. Individuals and businesses can opt for short-term loans to cover urgent cash requirements.