Are you looking to take long-term finance or short-term loans? Whatever it is, don’t apply before comparing loans. It’s possible that you don’t require a long duration of the loan repayment or vice versa.
The kind of amount you need also matters. Do you need a hefty amount like £40,000-£50,000? Or do you only have a short-term requirement like a £1,000 loan?
This article will help you decide whether it’s good for you to apply for a long-term loan or opt for a short-term money loan. Let’s understand both the options and their pros & cons in detail!
Long-term Loan – Definition
A long-term loan is a personal loan you get from banks and other financial institutions. You can apply for long-term loans online as well. Your credit history needs to be top-notch to get these loans. Also, your financial position should reflect that you can easily repay long-term repayment loans.
Long-term finance tenure may vary from a few years to several years. Generally, you can get a loan of up to £50,000 as a long-term personal loan.
Long-term Personal Loans – Usage
It’s pretty clear from the description that the duration of the loan repayment is longer for long-term personal loans. Naturally, the amount which is required is also substantial.
So if you need to spend on costly affairs like buying a luxury car, you would want to apply for a long-term personal loan. Reason being that you can pay long-term finance in easy installments.
Pros & Cons of Long-term Loans
The following table contains the downsides of taking a long-term personal loan and its benefits.
|Usually, the interest rate is lower considering the longer duration of the loan.||The long duration of the loan can be counterproductive as you are bounded for more time.|
|The amount you can borrow is more than what is available in a short-term loan.||The overall amount you repay is more because of the extended tenure of the debt.|
|You can apply for long-
term loans online and offline. There are various providers available.
|You need to pay processing fees.|
|Most credit profiles can get long-term personal loans.|
Short-term Loan – Definition
Almost all banks and various online lines of credit provide a short-term loan. They are unsecured personal loans provided for a short time. Since the loan repayment duration is limited, the loan amount is also less. You need a robust credit profile to get short-term money loans.
Short-term loan tenure may vary from a few months to a year. Generally, you can get a sufficient amount as a short-term personal loan.
Short-term Personal Loans – Usage
The duration of the loan taken for the short-term is usually for few months. Therefore the amount borrowed is also not a significant sum of money. You can apply for as less as a £1,000 loan if you are ready to repay quickly.
Short-term money loans are usually taken to fulfill a demand for quick money, such as funding a short vacation.
Pros & Cons of Short-term Loans
The following table contains the downsides of taking a short-term personal loan and its benefits.
|There are many providers of short-term loans.||A short-term loan amount is lesser than what you can get as a long-term loan amount.|
|You are not bound by the repayment duration of several years.||Missed repayment deadline leads to further debts and penalties.|
|You can get quick cash.||The interest rates of short-term money loans are higher than long-term finance due to the short duration of the loan.|
|There are various processing charges which increase the overall amount you repay.|
The Verdict – Short-term Loan VS Long-term Loan
You might’ve gauged the verdict by now. A long-term personal loan is not for you if you need a limited amount for a few months or a year. Get a short-term money loan for a few months or a year and get your thing done.
Similarly, it doesn’t make sense to apply for a short-term money loan in case you need a considerable amount for a longer duration. Only long-term finance with spread out EMIs for a long time can fulfill such requirements.
But never forget to compare loans of different providers. Consider interest rates, loan duration, processing charges, and additional costs to perfectly calculate your overall repayment amount. Go with a financial institute which provides you with a financially workable deal.