The ever-increasing budget and our everyday lifestyle sometimes make it difficult to make ends meet, and that is where loans step in. An immediate financial crisis comes without any invitation, and it becomes difficult to manage that amount of cash in such a short span of time, especially when you have other financial priorities. Short term loans can be the only hope for the ones who need it on an urgent basis. Let us discuss in detail the pros of taking short term loans in Canada.
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Difference between short term and long-term loans
One of the major differences between long-term and short-term loans is the length of tenure for their respective repayment period. Short term loans in Canada are simple and hassle-free; one needs to repay those loans within 3 to 18 months. Whereas, the long-term loans are to be paid off during a longer amount of time, which not only creates tension and hassle but also complication among your finances as well. Usually, the long-term loans begin from 24 months onwards to pay it off. It all depends on the bank or the lender that you’re borrowing money from and possibly the loan program you have participated in.
Loans have always been a complicated affair, and getting an approval depending on all your bank statements is no easy task. Incurring loans faster requires a lot of effort which is not possible, especially during a crisis situation. Let us discuss some of the benefits of short term loans:
Lower Interest Rate – Short term loans usually have lower rates of interest as compared to long-term loans which mean the borrower is able to save money in both ways: firstly, on the lower rate of interest which is already lower than other loans and secondly, in the overall interest paid throughout the loan tenure is also lower. Short term loans in Canada can give multiple opportunities to the borrower in a hassle-free manner.
Tenure – As the rules on loan payment go, the longer the tenure of the loan, the more interest is required to be paid by the borrower. Apart from the loan amount and interest rate, tenure is also an integral factor. Generally, business loans are available on a short-term basis, whereas personal loans are available on a mid or long-term basis. Personal loans can also be given on a short-term basis on a much lower rate of interest if one agrees to lessen the tenure. The flexibility is always there when one applies for short term basis loan.
Fast Money – One of the other factors about short-term loan would be that a short-term loan gets you the money a lot faster. Most of the times, the money loaned for short terms is to pay for things that happen without forewarning, like a medical emergency, deadlines for credit card bills, etc. The urgency to pay off things that you’re getting the loan for is higher; thus immediate cash without much hassle makes it easier than ever.
Predictability – During the loan application, it’s very difficult to predict the future and your financial condition during that time. It’s always advisable to opt for short term loans where the budgeting becomes much easier than the long-term loans, which might take up to 10 – 12 years to repay the entire amount.
Credit Score score – Short term loans also do not let you hamper your credit score. When you apply for a short-term loan and repay it on time without any delays, it gives excellent feedback for your credit score.
Eligibility Criteria – It’s a well-known fact that loan approvals require an adequate number of criteria to be met to qualify for the same. Only the most qualified borrowers have been eligible for long-term loans, as that requires a lot of background checks and documentation. The lenders sometimes face a risk of non-payment, especially in the long-term loan compared to that of a short-term loan. In case of short-term loans, the documentation process is cut to minimal, like checking your credit scores, rent receipts, bank statements and that’s about it. Once the basic documentation is completed, you will be entitled to the loan amount.
Now that you have a better understanding of short-term loans, the next time there is an emergency or a crisis situation on board, panic a little less and apply for a short-term loan in Canada. Among the hundreds of lenders to choose from, select the best ones who can give you the least amount of interest and the best offer.