An economic need has arisen and you have decided to address it by requesting an online loan but then you have the question about what interests you most: a short-term loan or a long-term loan.
In SaveAxis Finance we explain to you exactly what each one consists of and we study both the advantages and disadvantages of a short and long term loan so that you can decide with discretion which of the two products is more interesting for you.
Short and long term loan: how are they different?
A short term loan is a type of credit that must be repaid within a maximum period of one year. On the other hand, a long-term loan is one that has a maturity of more than one year, that is, that can be repaid in installments whose payment period exceeds twelve months.
Advantages of a short term loan
- A short term loan allows us to obtain money immediately. And, today, we can request our short-term credit through the Internet and get a quick response, which makes us receive the money in our bank account in just a few minutes.
- Does not require paperwork. In general, we just need to have our ID, an account number to receive the deposit, and our contact information. We will not have to break our heads looking for papers and documentation, nor will we need to visit any office to deliver them and formalize our short-term loan, which simplifies – and much – the application process.
- Short-term interest rates are lower than long-term rates.
Disadvantages of a short-term loan
- The loan amount is usually not very high. In general, we talk about credits that do not exceed 800 or 1,000 dollars.
- They force to collect the money borrowed in a short period of time, which is not plausible for all clients who consider requesting a loan to cover a need.
- They cannot be postponed. They must be returned, yes or yes, in the stipulated period of time.
Advantages of a long term loan
- By offering the option to return it over a long period of time, you can choose the number of installments with which we will feel more comfortable paying.
- Long-term loans are better suited to the solvency capacity of each user.
- In many cases, long-term loan contracts can be modified or renegotiated.
Disadvantages of a long-term loan
- The interests of a long-term loan are usually higher than those of short-term loans.
- Long-term loans usually require payrolls, guarantees or documents that provide the solvency of the client.
- They mostly exclude users registered with ASNEF.
Another issue to consider is the entity to which the loan is requested. Banking entities often involve longer processes to process the loan. However, today there is the possibility of ordering it online.
The online loan providers offer different conditions to those of traditional banks, without having to provide documentation such as payroll or guarantees that justify the solvency of the client. And some even accept registered users in ASNEF. Read more here about loans without collateral.