What Are Short Term Loans

Short term loans are essentially loans that are offered for a specific amount of time, and typically for shorter periods than a standard loan. There are many financial institutions, as well as colleges that offer short term loans. Many times, the interest rates are much higher on these types of loans, and as a result they are usually taken out as a last resort. Circumstances can arise which would put someone in a situation of needing to borrow money fast. For this reason, short terms loans are often necessary. Following are some good examples of short term loans and the different institutions that normally offer them.

College Loans

Many colleges offer their students short terms loans for educational purposes. The normal amount of time for a loan of this nature is usually around 60 days. The requirements are that the individual applying for the loan must be a current student, and must have a job or some other proof of income. This is to insure that the loan can be repaid within the specified time frame. In some cases, when there is a pending student loan that has already been approved but has not been issued, the college will loan the student a higher amount of money, however, that amount will need to be repaid as soon as the financial aid is received. These loans can be very helpful to a college student who cannot afford things like text books, or other such materials, while awaiting their student loans or other financial aid to come through.

Pay Day Loans

There are many pay day advance or pay day loan companies today. These companies are designed to loan people money on a short term basis, pending and against an upcoming paycheck. These loans are unsecured loans and are usually accompanied by quite high interest rates. In fact in some cases the interest rate is as high as 33% on loans such as these. It is easy to find a company that offers payday loans, and often these loans are called “cash advance” loans. There are many companies online that offer these loans as well.

Bank Loans

There are also short term loans available in banks, and these loans typically come with a much lower interest rate than payday loans. Some short term banks loans will mature in about 60-120 days, while others can take several years to mature. The length of the loan, as well as the terms, depends on how much money was borrowed. In addition, there may be collateral asked for when obtaining short term bank personal loans. If the amount of money that is being requested is a small amount, there may be no collateral necessary. In the case of larger loans, it is almost always asked for. Often, with a personal loan, the bank will look at a person’s credit history as well as several pay stubs. If a small business is asking for a loan, the bank may want to see the most recent tax returns, as well as the income history, and business credit report.

While no one ever likes to think that they could end up in a situation where they would need to take out a high interest short term loan, unfortunately, things happen. Short terms loans can help get someone out of a financial jam, provided they are repaid with as much ease as possible, in the specified amount of time.