At some time or another, you may have been faced with the need to take out some kind of loan. While you obviously needed the money then, were you aware of how long it would take to pay back and the additional interest costs?

Borrowing is a financial decision that shouldn’t be taken lightly as there are different consequences for each decision.

 

Here is a quick guide to long and short-term loans that should help make the decision easier in the future.

 Short-term loan

 Long term loan
  •  loan term of one or less years
  •  loan term is usually 3 -10 years
  • generally used for smaller loans such as  micro, personal or instant cash loans
  •  generally used for larger loans such as  the  bond on your home, or financing your  car
 Advantages:
  • can be obtained quicker than long-term  loans
  • can help bridge payment gaps quickly
  • fast approval
 Advantages:
  • fixed interest rates
  • build your credit rating
  • tax benefit because your debt becomes  deductible
 Disadvantages:
  • higher monthly repayments due to the  short span of time you have to pay back  your loan
  • can be hazardous to your credit rating if  you don’t manage to pay back the loan on  time
  • high interest rates
Disadvantages:
  • you generally have to wait a longer  period of time for your loan to be approved  so it is not ideal for when you’re really cash  strapped

 

If you are interested in taking out a loan and would like a quote, there are multiple ways for you to get in touch with us! Alternatively chat to our MoneyBot to apply now!!