Most of us have faced a situation wherein we need to borrow money to sort out unpaid bills. Fortunately, now the task of borrowing money is quite easy, as there are plenty of options available in the market. There are numerous types of loans and countless lenders you can choose from.
Reliable lenders like LoanPig are always there to offer you customized loans, which can help you sort out your current financial issues. To know more about their plans, click – LoanPigÂ® | Short Term and Payday Loans Provider | Direct UK Lender.
When you think about taking a loan, it is crucial to be aware of the 2 most common options – Short term loan and Long term loan. Most of the loans are divided into these two heads. Once you are clear about – why you want to borrow money, how much money you want to borrow, for what time period you want to use, and what interest rate can you bear, picking a loan plan becomes extremely easy.
Generally, as the name suggests, short term loans are taken for a shorter period of time and long term loans for a longer time period. Let’s go a little into detail and know how both the loans work and which one can best suit your requirement.
Short Term Loan
Short term loans are usually borrowed for a time period of 1 to 5 years. Since the amount borrowed in short term loans is not very high, the filing and approval is done pretty quickly. You can expect to have the approval within a day. Nevertheless, the lender will do a credit check on you and if your credit score is high there will be no issue in acquiring the loan. Also, if your credit score is moderate, you can still expect to get the loan, but the interest rate might be higher than usual.
Long Term Loan
A long term loan is usually taken for more than 5 years. You can apply for a long term loan to banks as well as alternative lenders. Depending on your credit rating, the amount of loan and interest rate will be finalized. The higher your credit score, the lesser interest rate you can expect to get. However, in order to apply for a long term loan, it is necessary to have a regular job or income.
Which is better for you Long-Term or Short Term financing?
Short term loans are usually taken to deal with emergency situations. It is ideal to take a short term loan if you are having temporary financial issues in the company, or you need to buy new equipment to complete a surprise project, or you need to go for an urgent renovation project, etc. In simple words, short term loans are ideal to deal with temporary situations. No wonder, the interest rate is higher in short term loans but you will get the approval extremely fast and you will not have to worry about long term payments as well.
On the other hand, long term loans are usually taken with an intention to undertake a bigger expense or a long term project. For instance, if you want to expand your business, or open a completely new store, long term loans can prove to be a better option.
To conclude it can be said that the type of loan you apply for depends on your business need. Lenders like LoanPig can help you decide better, and all you need to do is make a call. They can provide many different loan options, as well as explain you which one will suit your needs best.