A financial emergency can happen anytime. An unexpected medical bill, your car breaks down, a necessary house repair—no matter how well you manage your money—sometimes quick cash is needed to cover expenses. When an unexpected financial setback happens, when you need to get funds in a pinch, one choice for borrowers is a short term loan. There are a few short term loan types available depending on your unique needs or requirements.
A short term loan is a particular kind of loan available to support borrowers in need of temporary personal capital. They are designed to provide quick cash when savings are short or cash is lacking. Short term loans have repayment periods that are shorter than traditional loans. In some situations, they can be an attractive option for people. Though credit limits for short-term loans may be lower and interest rates higher than traditional loans, short term loans offer a viable solution that can alleviate a sudden temporary financial emergency.
The primary characteristic of short term loans is in its name. They are structured to be paid back within a short period of time—within a year, but it’s not uncommon for lender terms to be a few months or even a couple of weeks or less. Some short-term loans simply specify a due date for the borrowed funds to be paid in full. For example, one option may be a loan for $4,000 with a five-month repayment term. In another instance, with a short-term loan, you may receive a lump sum of cash, and then repay that loan with interest in a week. In contrast, any loan for a longer-term than a year would be considered a long term or traditional loans, such as a car loan or mortgage.
Short Term Loan Types
Short term loans issued to individuals are a type of personal loan. There are two short term loan types, secured and unsecured. In the case of the former, some type of collateral must be offered—a financial asset that is owned by the borrower, such as equity in a home or a car title—that can be used as payment to the lender if the loan is not paid back.
In general, secured loans are usually long term loans. Larger amounts of funds can be borrowed over a longer period of time at a lower interest rate. One exception would be a title loan, which gives a lender title to any motor vehicle that the borrower has title to, for example, a car, truck or motorcycle. Title loans often last for 30 days or less. The lender gives the borrower cash and keeps the title to the borrower’s vehicle.
On the other hand, where a secured loan means a borrower has to place collateral of some value to obtain a loan, an unsecured loan requires no collateral. In addition to personal loans, credit cards and student loans are among the most common forms of unsecured loans.
In Arizona, registration loans are short term personal loans for borrowers who need to secure the funds quickly. Registration loans have become a convenient way for consumers to borrow money. There are no hidden fees, they require no credit history check, and most lenders offer terms that fit the budget of the borrower. Borrowers only need a car registration in their name, not the title, to be eligible for a registration loan.
Though a short term loan might not be the first choice in a financial emergency, they are helpful in a pinch and do have several benefits. The first being that short-term personal loans offer quick access to the money when it’s most needed. When an unexpected expense needs to be paid immediately, short term loans are a solution. Title loans and registration loans are two types of short term personal loans available for fast cash. When applying for a short term loan be wary of high-interest rates or costly fees.
Finally, while a short-term personal loan can help when a difficult financial situation arises, it’s not a long term solution for financial problems. Short term loans should only be used for a specific purpose with a repayment strategy in place. If you’re going through a period of financial stress and live in Arizona, My Tio Rico may be able to help.