There are many cases where people are in urgent need of financial resources: for example, they have to do a car repair, replace a washing machine or pay an already incurred bill. If they can not handle the respective sum at the moment, they are dependent on debt financing. This term covers all variable and fixed loans from banks and other service providers.
What differentiates short-term financing from long-term
The main difference lies in the duration of the financing requirement : For a short-term loan, borrowers want to bridge a manageable period of a few days to a few months. They are sure that they will soon have the money and can repay the loan. The situation is different with long-term loans: they can only repay them with multiple installments. Many banks offer such ordinary installment credit from a term of one year. The height is not a characteristic differentiator, it depends on the individual conditions. For example, the one concludes a short-term loan of 5,000 euros, because he can repay him quickly because of a high income. The other has to borrow for 1,000 euros for a long-term loan because he can only raise low monthly installments.
The possibilities at a glance
It may be that consumers with short-term financial needs can borrow money from someone in the local community, and such a private loan belongs to the debt financing category. As a rule, especially with higher amounts, they will contact a bank or another service provider:
Banks: These establish a Sitcosition on the current account with sufficient creditworthiness. They rarely award short-term installment loans, which means too much administrative work for them.
Alternatives to the bank: Innovative online providers have discovered the market for short-term loans. They lend money for short periods of a few weeks.
Sitco or short-term payday loan
With the Sitco and the short-term payday loan, two types are available, their more detailed consideration is worthwhile: The Sitco acts as a credit line in the checking account, the customer can use flexibly. Interest charges only apply to the amount and duration of the account’s negative value. The interest calculation is made on a daily basis. Consumers can balance their account at any time, they do not have to pay any fixed rates. Such fixed installments they agree on a short-term loan, often only a final payment including interest. For the dispatching speaks the flexibility. However, there is a risk of indebtedness, because no timely repayment is required. He tempts to exhaust the credit line often or permanently. This is accompanied by considerable interest costs. With a short-term loan borrowers avoid this risk, and he also convinces with planning security.
Instant Credit: Fast Payout
Anyone who has decided in principle for a short-term payday loan and quickly needs money, should look specifically for instant loans. With these loans, the providers guarantee a quick check of the loan request and a prompt payment. The settlement takes place online. Interested people apply for a loan and receive an acceptance or a rejection from a good company within a few minutes. After checking the proof of income, the lenders trigger the payment, the whole process takes two to three working days for the best lenders.
Low interest costs for short-term financing
Overall, it can be stated that consumers do not have to fear high interest payments for short-term debt financing. That’s because of the short time span. The interest costs depend not only on the amount of interest, but above all on the term. Nevertheless, consumers should compare interest rates to maximize the savings potential.