A person needs has always been increasing. Everyday, there are things people want and need. Though there are times when people cannot meet this because there are problems like experiencing financial crisis. Everything will be paralyzed if you do not have money. This is why there are lending institutions that helps you cope with financial crisis. These are what you call loans.
When you apply for a loan you are given a specific amount of money to be paid for a specific period of time. An interest should be added on to the amount of be paid monthly. You do have a choice in lending, as there are 2 kinds of loans, short term and long term. People need to loan for different purposes.
Short Term Loan
This is a loan given to borrowers with a small amount of money given for a short period of time. One can pay his kind of loan because the usual amount does I very affordable. As lending institutions would always say do borrow money that you can afford to pay when repayment period comes. The longest period for a short-term loan is up to 3 years. Payday loan is one of the common short-term loans that are usually used for medical bills, tuition and home repairs. A small amount of money is approved given for a short period. This is credited to your account and payment also should be debited as well into your account with the interest added already. There are only few required documents that are asked in order for the loan to be approved. Short term loans do have higher interest rates than long term loans.
Long Term Loans
Long term loans are loans that are processed for long period of time. Usually people who are into long term loans use this for mortgages, wedding and business loan. This is usually based on your credit standing not like short term loans where there are no credit checks made. Long term loans base the amount to be borrowed by the credit score you have. The better your credit score is the better the interest will be for you. Long term are divided in to 2 kinds of loan in the form of secured and unsecured loan. The ones that ask for an asset or collateral belongs to secure loan, an example of he asset to be secured is a car or a house. While the unsecured loan is the opposite to secure loans. This does not need any assets or any form of collateral. This has a more higher interest rate. You can compare this to your line of credit in your credit card. Long term is actually based in your credit standing , credit history and your current income. Long term loan gives you a lot of time to relax because the time is very flexible with regards to payment.
Before making any decisions about loan, you should put in mind that you should loan if the need arises. You should also be paying your loan with the exact amount the right time to avoid charges that will lead to another problem in the future if not carefully thought about.
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