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The loans industry can be confusing, but is divided between long term and short term lending. A long term loan is typically characterised by offering amounts of over £5,000, whilst short term loans are designed to cover short term cash flow problems. If you’re running short of cash and need a small amount of money to tide you over until you payday, or need to fund an essential purchase costing under £5,000, then a short term loan is the most typical type of loan to apply for.
So what are the benefits of the short term loan?
Short term loans can often seem more expensive than long term loans, but the high APR rates attached to short term loans are calculated annually. If a loan is for only 31 days duration, what can seem like a very high APR works out at much less. This is because the APR does not show the true cost of the loan over a short period of time. It’s far better to look at the TAR Rate (Total Amount Repayable) for a true picture of the cost.
Taking out a long term loan commonly involves having to secure an asset such as a home against the loan. Short term loans are legally binding and must be paid off. But if a default occurs, the borrower won’t face the possibility of losing their home.
It is often easier to borrow in the short term with a poor credit score. Many short term lenders will consider more than just your credit score when making a loan decision. They’ll also take into account things like your affordability, such as your income and expenses.
A short term loan will be paid out far more quickly than a long term loan. Often a long term loan will be paid out within 2 – 3 days. But with a short term loan, you may get the funds in as little as an hour after approval.
Competition, new technologies and emerging new trends have made lenders to significantly simplify their loan application process. The process for applying for many type of loans is now so simplified that it can all be completed in just a couple of minutes. The exact procedure on how to apply for a loan would depend on the type of loan sought and the procedures of the lender.
Basically, to apply for a loan one would first need to contact the lender for a quote. The quote refers to the cost the lender is willing to provide you the loan. To request for a quote, you would usually need to fill a loan request form. This can be done in person at the lender’s office or better yet online. Some lenders also have call and fax loan application options. The application form would require basic information about the borrower and other information that the lender may deem necessary in making a decision about your application. Such information may include employment information, income information, collateral or security as well as credit rating.
The entire application and verification process would also depend on the type of loan, whether secured or unsecured, short or long term, and other factors about the loan. The lender may need to check employment and income information, verify provided documents and information and even check for the credit rating of the borrower before making a decision. Applying for the loan is rather quite easy. Simply fill a loan application form at the lender’s office or website.