Loans are an everyday part of life. Some of us have student loans or mortgages to pay, but sometimes we encounter unforeseen circumstances, and even our emergency money isn’t enough. We need a quick loan, but don’t want to be burdened all our lives paying off the debt. Short-term installment loans are beneficial in these types of situations.
Long-Term Installment Loan
As mentioned above, student loans and mortgages are examples of a long-term installment loan. These loans usually go through a rigorous application process and are for, you guessed it, “long-term.” In long-term installment loans, you may have to secure some type of collateral to be approved for the loan. Obviously, with any loan, you must repay your loan through the life of the debt, and generally, have a payment schedule put into place. For many of us, a long-term installment loan can be cumbersome. The debt is repaid in an extensive time period and we sometimes feel as if there is no end. There are financial institutions that allow borrowers to apply online, however, this does not always mean you will save a trip to the bank.
Long-term installment loans are normally loans that are for a substantial amount of money needed. For instance, one example is home mortgages. Homes today vary in pricing but normally are not easily paid off in a short amount of time. Sometimes, it takes our whole lives to pay off our homes. We are strained with the burden of making scheduled payments for decades in order to keep the home we chose to purchase.
Short-Term Installment Loan
Short term installment loans (also known as personal loans) are the opposite of long-term installment loans in that the period of time for repaying the debt is short-lived. The amount of money to be loaned is generally an amount payable in a short amount of time. Since the amount of money received from a short-term installment loan is much less than the amount of a long-term installment loan, the application process is much quicker. Most short-term installment loans are unsecured. This means the lender assesses the borrower’s application based on the information provided in the application. Many short-term installment loan applications are done online.
Take, for example, you are injured from an accident. After the health insurance pays their portion, you are left with your share. You take a look at your savings and realize it is not enough to cover the medical bill. You would benefit from a short-term installment loan. It is a loan that can be paid in a short amount time. Although repaying the loan still carries a burden, it will not burden you to pay over a prolonged period of time. Another example that benefits from a short-term installment loan is the consolidation of credit card debt.
When comparing long-term versus short-term installment loans, it really depends on the situation. If you’re intending to pay off the loan in a short amount of time, then the obvious choice would be applying for the short-term installment loan. Some short-term installment loans offer no penalty if you decide to pay off the debt early. They may offer options like stretching out the repayment over several installments or the option to pay the loan in full all at once. An added benefit in applying for a short-term installment loan, is that the application process is usually less stringent than applying for a long-term installment loan. In an article, it describes how short-term installment loans (personal loans) can help reduce credit card interest rates and improve credit scores. In contrast to long-term installment loans where some terms include fluctuating interest rates, personal loans normally have fixed interest rates throughout the duration of repayment. The article goes on giving its readers some tips on how a personal loan can work for you and how to benefit from it. It states, “do use a personal loan to repay credit card debt and become debt-free.” It also adds, “do not use a personal loan as a tool to postpone debt repayment.”
In conclusion, whether you’re short on cash to pay a medical bill or simply trying to consolidate your credit card bills, applying for a short-term installment loan is quicker than applying for a long-term installment loan. Not only is applying for a short-term installment quicker, but it can also provide flexible options to repay the loan.