When it comes toapplying for a loan, there are some considerations you need to make. The amount of money you want to borrow is probably the biggest consideration, but so is the interest rate and the length of term you will borrow the loan for.
Imagine there are two R8000 loans you could choose from, one with a shorter term that would require you to pay higher monthly instalments, and another with a long term repayment option. The long term option sounds enticing, right?
Larger monthly repayments seem like an intimidating characteristic of a short term loan, and you may not want to apply for a loan like this. However, short termloanscan actually be a good option for you, especially in moments when life becomes unpredictable and you have a financial emergency. Read on for the benefits of short term loans.
Less interest accrued
As short term loans need to be paid off within 12 months, there is less interest to accrue (or accumulate). Compared to long term loans, more interest is added to your loan balance the longer you borrow money from a lender. With a short term loan, you repay in less time, and as a result, there is less time for interest to accrue.
Quicker to get approved
Short term loans can be lifesavers when life gets unpredictable and you have an unexpected expense to pay, like medical bills or car repairs. With the requirements for a short-term loan being easier to meet, because of the smaller amount of money you are borrowing, you may get your short-term loan application approved quicker. With lenders like FASTA, you get your funds immediately upon approval of your loan application.
Build your credit score
Short term loans can be a good way to help youbuild your credit score. However, this will depend on ensuring that you pay off your loan in full and on time, before the end of your monthly repayment term. Keep in mind that if you take out a short term loan to build your credit score, you want to show credit lenders that you can be trusted to make repayments on time, which will benefit you in the long run when it’s time to apply for larger loans like home or vehicle finance.
Key Takeaways
Short term loans are very beneficial for people looking to build their credit score or need quick access to funds. Remember, only take out a short-term loan if you need to and can repay the loan amount on time.
If you’re looking to take out a short term loan, check out FASTA’s instant credit offerings and start your application today.
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