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Features Of A Short-term Loan That You Should Know
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These long terms, however, are not meant to meet you short-term requirements. For example, you are going out of station and you need some money pay for your trip and your stay. You will not get a long term loan to fulfil the money requirement for trip. In this case there are some people that opt for short-term loans. Short-terms loans are basically the advance that is paid back within one year. They are availed to meet the short term cash needs like paying off a bill, buying a home appliance like microwave or a food processor.
Here are some features of the instalment short-term loans you must know before you get one.
This is the major advantage of a short-term loan. The duration of this loan is less than one year or maximum one year. You will not find a short-term loan that would exceed the time limit of one year. This means that you are burden free within one year.
2. Cost of the loan:
Cost of loan varies from organization to organization and also depending upon the type of loan. There are some financing organizations that charge more for a short term loan than they for a long term loan. Also, some organization that charge price according to the type of advance you are borrowing. For example a personal loan will carry the rate of interest that will be different from that is used to finance the start-up costs.
An individual might go for a short-term loanto finance his trip or buy an appliance like a fridge or even to pay off their utility bills. But, an organization is dependent on a short term to finance its start-up costs, account payables and operational costs.
4. Clean up:
The clean-up happens when the financer asks the borrower to pay back their entire obligation. Clean-up term is used to when the financing organization asks the borrower to pay off their entire obligation. For banks clean-up is the proof that these types of loans are meant to meet the short-term or cyclical requirement.
5. No prepayment penalty:
Long term loans carry prepayment penalty. This mean that you are if you pay back a long-term before the time of complete repayment you will have to bear the charges for repayment on advance. Such a clause is not attached with a short-term loan.
Instalment short-term loans have several benefits attached to it. The best part is that it doesn’t require a borrower to keep a security with the contract.
Broad Stevens is author of this article. For further details about Installment short term loans and short term installment loans Uk visit the website.
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