As the name suggests a short-term loan is taken for a repayment tenure of not more than a year. Usually, these loans can vary anywhere between $100 to $100,000 depending upon the credibility of the borrower.
Ideally, when planning to take out any type of loan, it is better to make an informed decision. For example, if you read more on online installment loans at thelibertarianrepublic.com you can find what you should be considering when taking out a loan. But, surely the factors to consider are not the only things you should pay attention to.
It needs no mention- when there’s a loan, there is interest to be repaid by the borrower. But, the terms of repayment can vary across the types of loans.
Online Installment Loans
The fast-paced lifestyle demands everything to be available on-the-go. Even financial solutions. And surprisingly, it is now possible to take out a short-term installment loan online. From application to approval, everything can easily be taken care of with the help of an online application.
The users or the borrowers have more options as compared to a conventional banking loan. It’s because the users are generally connected with more than one lender through the application process. So, it can conveniently reduce the rates of interest.
Merchant Cash Advances
These are also known as cash advances, but nonetheless, they are still considered as debt. Usually, the lender collects the loan amount by accessing the borrower’s credit facility.
To put this into perspective, the borrower pays a share of every sale they make to the lender. In other words, the lender collects partial payments, not monthly but with every sale transaction that the borrower makes.
Line of Credit
One of the most suitable installment loan options, particularly for businesses is accessing their line of credit. Usually, the bank would set a limit to the maximum credit that a business can take out. As a result, the borrowers have access to anytime-credit and the repayments are collected in installments.
The best thing about a line of credit is these are usually available at lower interest rates as compared to a credit card.
Payday Loans
Most of the users don’t even consider these loans to be installment loans. But of course, payday loans are definitely short-term personal loans.
The main difference between a payday loan and an installment loan is the repayment. Ideally, a payday loan is needed to be repaid in one go. Perhaps, the name suggests the same- these loans are offered from payday to payday.
Invoice Financing
Another common form of short-term personal loan is through invoices. Evidently, these loans are also accessible to businesses only.
The borrower places their invoices as collateral with the lender. And as soon as the invoice is cleared the lender deducts the receivables and passes on the rest of the amount to the borrower.
Tips for Taking Out an Installment Loan
When taking out a personal loan, it is advised not to expect a lower rate of interest. Personal loans usually charge higher interest rates as compared to a car loan or a mortgage.
One of the reasons for this is the limitation of collateral. Most of the personal loan options do not require borrowers to place any collateral with the lender.
Nevertheless, it is advised to consult with a financial expert before taking out a short-term installment loan. No matter what, these loans are also considered debts and can affect your credit score.