Short term loans in Canada work much like long term loans. However, there are a few differences that you should know about in case you are looking to get a loan sometime soon. Today, we’re going to go over those differences and talk about which is best for what situation.
What is a Short-Term Loan?
Short-term loans in Canada, in general, are loans that are taken out for less than a year. However, most can be and are repaid in a few months at most. These loans are for things like emergency bills, car repairs, and similarly unexpected expenses. They generally have higher interest rates and lower requirements for entry. Usually, the loans are for less than $1500 and generally in the $500 to $1000 range.
What it Takes to Get a Short Term Loan
To get a short term loan, you have to have a bank account with a three-year history, a social security number (to check your credit score,) a job with direct deposits, and a place you call home for your address.
It takes minutes to complete the application process for a payday loan. The credit check and subsequent number crunching will present you with loans that you’ve been approved for and their repayment terms. Accept, and you’ll have your money on the way.
What is a Long Term Loan?
On the other hand, a long term loan is an exact opposite. The loan amounts are larger, the due date is further away, and the interest rate is generally lower. As such, your credit history often needs to be longer, and unlike applying for a short term loan, the application process will take longer.
When borrowing money in this way, you could be looking at a loan length of 60 months to 30 years with loans for things like homes, cars, RV, and other large purchases. Your ability to repay the loan will be assessed based on credit score, job, savings, and credit usage overall.
What Are the Differences?
You may note that each loan enables you to take out money for the bills you need. Whether a personal loan, payday loan or car loan – they help you have what you need. The difference lies in what you take out and for how long.
If you take out a $100,000 loan for 30 years – you’re looking at a long term loan. If you take out an online loan for $500 intending to repay it in the next month – then you’re looking at a short term loan.
Want a Short Term Loan Today?
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