John Lennon had the right idea when he said, “Life is what happens to you while you’re busy making other plans.” Have you ever been planning a summer vacation when a sudden car repair needs attention or an unexpected medical expense crop up?
Unfortunately, unplanned expenses like these happen all the time, and even the best budgeters can find themselves coming up a little short.
That’s where short-term loans can help stretch those ends to make them meet.
People often turn to short-term loans to handle sudden expenses like a medical or financial emergency, such as a car accident or damages to your home because of extreme weather.
But a short-term loan can be helpful beyond just emergency assistance.
Whether you’re purchasing a car, financing a well-earned vacation, or looking to pay off a high-interest credit card bill with a lower interest rate option, a short-term personal loan can make it easier for you to get ahead.
What are short-term loans?
A short-term personal loan is a loan—usually for a small amount—that you’ll repay over a short period.
Short-term loans can vary in length from a few months to about a year, although some lenders have longer repayment timeframes.
Unsecured short-term loans
A short-term loan is unsecured, meaning you aren’t putting up collateral like your car or home to guarantee the loan. That means, if you don’t pay back your short-term loan, your lender can’t foreclose on your house—but they can take other steps toward repayment.
Short-term loan repayment terms
Short-term loans require borrowers to repay the funds in equal monthly loan payments, which are made up of both principal—the loan amount, and interest—the ‘cost’ of borrowing the money.
Short-term loans offer borrowers many advantages; let’s look at five of them.
What’s your loan scenario?
5 Benefits of a short-term loan
Just like its name implies short-term loans are meant to be repaid in a short period of time. That’s why one of the first eligibility criteria that many lenders consider is whether you have money coming in, either from employment or another source of income.
Get approved fast
Many borrowers consider getting a short-term loan to help in an emergency or to meet a time-sensitive deadline. In other words, you’re in a situation where you need the cash fast.
Conventional lenders, such as banks and credit unions, can have a more complex application process and a lengthier approval process compared to private lenders offering short-term loans. And if you have a poor credit history, you’ll have an even harder time qualifying.
Borrowers can often apply online with a private lender. And because of the faster approval process, most borrowers have quick access to the funds deposited into their bank account within a few business days.
Improved credit rating
A short-term loan can actually help improve your credit —so long as you repay the total amount within the allotted timeframe.
Credit scores reflect your borrowing activity. Your credit history lets others know that you not only met the monthly repayments but also paid the entire loan amount back to the lender. This demonstrates your creditworthiness as a borrower and makes it easier for you to get other loans in the future—possibly with better interest rates.
Pro Tip: When it comes to interest rates, remember this general rule—The higher your credit score, the better interest rate you’ll receive
Pay less interest than longer, conventional lender loans
The longer you have a loan, the longer you’ll be paying interest.
When you get a short-term loan, you’ll have the funds for less time, which means you don’t pay as much interest over the lifetime of your loan.
If your short-term loan has a higher interest rate than a long-term, conventional loan, you could still save money—you’re repaying the loan faster.
You don’t need to put up collateral
Short-term loans are unsecured. This is one of the most popular advantages of the short-term loan—especially if you run a small business or are trying to secure business financing.
Because the amount of money you’ll be borrowing is typically less than long-term loans, most short-term loan lenders don’t require hard assets—like your home—to secure the loan.
In addition, the smaller loan amount reduces the lender risk, making it easier for borrowers to qualify.
Compared to traditional lenders, private money lenders offer short-term loans that are often tailored to borrowers’ specific situations.
This gives you more control over the lending process. Look for lenders that offer the loan terms for your situation.
What should you know about short-term loans?
If you’re thinking about a short-term loan, it’s important to consider why you need the money and evaluate your ability to repay the loan in full.
Start by asking yourself the following questions:
- How much do I really need?
- How quickly do I need the money?
- What types of financing do I qualify for?
- How much will it cost?
How to find a private lender that offers short-term loans?
Searching for a private lender online can be a quick and effective way to do research. Online reviews can offer valuable insight into how a lender does business.
Pro Tip: Any lender worth considering will have a wealth of information on their business website.
Remember to check with family and friends for personal recommendations.
Look for lenders with experience in short-term loans, ideally in your state. If you’re looking for Colorado or California loans, Marquee Funding Group can help. We service borrowers in California and Colorado, but what really sets us apart is how we do business.
We approach every loan with honesty and transparency and are proud to put our industry experience and expertise to work for every customer’s benefit.
Marquee offers loan amounts ranging from $50,000 to $20 million. Our in-house underwriting, loan processing, and servicing allow for quicker turnaround for various loan products, including:
- Single and multi-family home loans
- Commercial loans
- Industrial loans
- Construction loans
Secure a short-term loan with Marquee Funding
Now that you better understand short-term loans, you might wonder if one is right for your situation.
The loan specialists at Marquee Funding will review your situation to help you find the solution that works best for you.