Short term personal loans are issued to a borrower for a very short period of time. It is also paid back to the lender immediately. In this arrangement the borrower and the lender enter into a short term contract. Short term personal loans can be obtained from commercial banks and other financial institutions. In short term personal loans interest rates charged is higher because of the short duration of the loan. Also a limited and small amount can be borrowed in case of short term personal loans.
Interest Rates In Short Term Personal Loans:
The most important aspect of short term personal loans is the interest rates offered by the lender. Generally higher interest rates are charged in short term personal loans because the time span of the contract is very short. Another reason for higher interest rates is that the lender does not require any security so they charged high interest rates.
Short term personal loans are offered worldwide. The interest rates offered by the companies depend on the credit history of the customer and the time taken by him in the repayment of the loan.
Credit Range Of Short Term Personal Loans:
In short term personal loans, limited amount of loan is offered because the time span of the contract is very short. Banks and financial institutions do not offer more than 15,000$ to 20,000$ if the time to pay back the loan is fore years or less. But for the advertisement purposes loan of 1000$ to 5,000$ is also offered by the lending companies.
Advantages Of Short Term Personal Loans:
Short term personal loans are very beneficial if a person is in need of urgent cash. The whole process of short term personal loan is quick and easy. The borrower and the lender enter into a short term contract with each other. Also the lenders are not interested in collateral security against short term personal loans. They are only concerned about good credit and financial history of the borrower.
Disadvantages Of Short Term Personal Loans:
The biggest disadvantage of short term personal loan is very high interest rates as compared to the other types of funding available in the market. Smooth availability of short term personal loans attract people strongly because it provides them financial relief at that time. But it may become difficult for them when time arises to pay back the loan.
Tips And Advices:
It is highly advisable to the borrower to carefully investigate all aspects of the contract. He should make a thorough market research before entering into any contract with the lending company.
The borrower must also take into account the current market situation and the interest rates prevailing in the market. He should negotiate with the lender for the best interest rates that suits his requirements. Also consult loved ones and friends before making a decision of borrowing money from the lender.