When defining the meaning of a short term loan you must consider that it is a loan first and foremost. Short term means that it is due within a certain amount of time set by the lender. Another name for a short term loan is a payday loan. These types of loans are available through different lenders. When you need a loan to help you pay off small bills or just to help you make ends meet, you may want to consider a short term loan.
There have been occasions where colleges would offer short term loans to their students. One of the conditions was that you were a student at their institution, of course. You also had to prove that you could pay the loan back within a certain amount of time. The term is usually sixty days. With the rising costs of college tuition and fees, most students need more than a short term loan.
If you are looking for a short term loan you can usually find them via local banks, lending institutions and the internet. A short term loan is considered to be unsecured and tends to have high interest rates. All of this is configured given the borrower’s person information. You must have a job in order to take out a small term loan too. A lender will use your employment information in order to obtain the loan for you and feel secure that you will pay it back. Most times your loan payments can be drafted directly from your paycheck or bank account.
When you take out a short term loan you can expect to pay higher fees with less of your money going directly to principal. The reason behind this is simple, short term loans tend to be riskier and normally there is no credit check associated with it either. The lender is giving you a loan and taking a risk on you at the same time.
You can take out a short term loan from a bank. Banks tend to extend the maturity date from just sixty days to one hundred and twenty days from the date you take out the loan. Certain terms depend on the bank in which you are taking out a loan. In some cases, the loan could mature in up to three years. This will be determined by the exact amount of money you borrow.
Unlike a payday lender, banks do require collateral. This is contingent on the amount of the loan that you are requesting. The larger the amount of money you require, the more likely you will need to put up collateral. Banks take longer to process loan applications, as well. A payday lender tends to process applications within hours or minutes of submission. A bank is less likely to take a risk on you and will check your credit to make sure you can pay them back.
If you are a small business trying to obtain a short term loan, the history of your cash flow will be considered. Your business also has a credit score and that will be used in consideration of a short term loan for you, as well. The reason you may wish to use a bank verses a payday loan service is simply because a bank will not charge you a higher percentage rate for this type of loan.
You have choices, so consider where you would like to do business. Banks tend to be more credible. You can check the credibility of a payday loan service by checking with the Better Business Bureau. Just be sure to read any and all of the literature you are given concerning short term loans. The best thing you can do before you take out a short term loan is to become familiar with the lender and to become educated about their particular regulations.