Short term loans are cash advances given by a lender to a borrower for a short amount of time, usually no more than 6 months. A payday loan is a form of short term loan, which is repaid over several weeks and often after your monthly wage is paid. Overall a short term loan terms rarely exceed one year.
Short term loans usually involve relatively smaller amounts of money compared to long term loans. Good examples of short term loans include bank overdrafts, credit cards, payday loans and cash advances. Short term loans are easier to qualify for and could either be secured or unsecured loans although they mainly usually fall under the unsecured category. Secured loans would require a form of security or collateral. Unsecured loans would not require any form of collateral or security and would come with higher interest charges as they pose more risks for the lender.
Short term loans are usually used to meet up with unexpected surges in budget or unplanned expenditure. Short term loans are often called same day loans because they are more convenient and often quicker to access to enable the borrower use it for the desired purpose. There are different types of short term loans with different perceived advantages or disadvantages. Before taking out any form of loan, it is important to first properly understand the loan and shop for reputable short term loan lenders offering the best rates.