There are certain times in our lives we find ourselves in a financial situation where we may be strapped for money. This could be due to the pay check not arriving on time, some untoward occurring or shortage of money. If the amount required to tide over these temporary circumstances is small - a short term loan maybe the automatic answer. Applying for short term loans is an easy process. The application process is quick and simple, there are no pre-payment penalties and the interests rates are minimal. There are different types of short term loans available.
Bank loans: Banks offer short term loans. These loans are repayable within a short period of time ranging from 60 to 120 days. Some banks may even offer short terms loans for a period of 3 years. Terms and conditions vary from bank to bank and the amount of money borrowed. Most banks may require collateral but again this is dependent on the amount borrowed. Smaller amounts require less or no collateral. In a bank the loan application process is a bit lengthy and may require a certain amount of time. The bank checks the credentials of the borrower and his/her ability to pay back the loan. The credit history and score of the borrower is determined. If the borrower is borrowing money for business purposes then the business credit score is investigated. The percentage of interest applied is determined by the current market value and the pertinent bank’s discretion.
Student loan: Students are offered short term loans by colleges or banks. This is applicable only to students and it is the responsibility of the borrower to prove he/she is a student. The loan is repayable in a stipulated period of time ranging from 60 to 120 days. These loans can be obtained from the college or banks affiliated to that college. These loans help students to tide over a period, when they are expecting a scholarship from the college or fees to be paid by parents may have got delayed.
Payday loan: Payday loans are loans which are unsecured, have a high interest rate and are usually due with the deposit of the borrower’s next pay check. These loans are literally short term and require minimum formalities. These loans are helpful if a person is in a tight spot between pay checks. However, most banks prefer lending a short term loan rather than a payday loan.
Applying for short term loans is a fairly simple procedure. Most lenders have an online application where in details of the borrower needs to be filled out. Investigation of the borrower like credit score, credit history, other loans etc. is carried out by the lender. Most lenders may not even require the borrower to visit them in person. In a world of rising prices and inflation, there may be a time when people may have a cash flow issue. A temporary and immediate reprieve may be required to tide over that particular situation. A short term loan can bail out individuals from a sticky situation.