When you're looking to borrow money, you might wonder whether you should choose a short-term or long-term loan. While both short-term loans and installment loans will put money in your pocket, the purposes they serve can be quite different.
Pros of short-term online loans
One of the best features of a short-term online loan is the ease with which you can apply for one. You can do it all in one sitting without leaving the comfort of your home, and approval (or denial) typically happens within a few minutes after you submit your application.
There's generally little paperwork, no collateral required, and you don't have to pay loan origination fees or commissions to the lender. You can also receive your money in as little as twenty-four hours. For many people, it's also a bonus to be done with their debt in a shorter amount of time.
Cons of short-term online loans
The amount you can borrow with a short-term loan is usually smaller than with a long-term installment loan, and it needs to be managed carefully.
There may be fees, and while the overall cost of a short-term loan might not be high, it may be harder than anticipated to pay the loan in full with such a quick turn-around. This can leave short-term borrowers in a precarious position where debts can pile up quickly.
Pros of long-term online loans
Long-term online loans offer lower interest rates and a lower monthly repayment plan. They can also help you build your credit score, something that short-term cash advances don't do. Credit counselors often recommend them as a credit-building tool.
The approval process may take a bit longer, but the online application only takes a few minutes. You'll have to answer a few more questions than you do for a short-term loan, but you're typically going to be asking for more money.
Cons of long-term online loans
Because long-term loans typically report to credit bureaus, missed and late payments are also reported. That means if you're struggling to repay a loan, it may damage your credit.
You can apply for more money, but collateral may be required once you get over a certain amount. There's also the potential stress and anxiety of being under pressure to make monthly payments for years without being late. That may make long-term loans a bad option for you.
Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.
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Original Source: The Pros and Cons of Short-Term and Long-Term Online Loans
