Why is a Short Term Loan Considered a Low Cost and Quicker Option Compared to Long Term Loans?

If you are short on cash and need it fast for a financial emergency then a short term loan Montreal will be the right option for you. These are loans that you will have to pay back over a short period of time and you can get the amount quickly when you need it urgently.

Let us go through a few of the other details that you need to be aware of before taking these short term loans.

An Overview of Different Aspects of Short Term Loans

What are the typical reasons for taking a short term loan?

  • To tide over emergencies
  • To meet cash requirement until the next payday
  • If you are not able to get other types of loans

Why are short term loans popular?

There are several reasons behind their popularity, let us look at them here.

Low Cost Option

Compared to loans of longer duration, the cost of capital for short term loans Montreal is usually much lower.

Despite their higher rate of interest, these loans amass interest amounts for a lesser time period. Thus, the total interest you have to pay is considerably less.

For instance, there is a loan of 1.15 and if the loan amount is $1,000, then you will have to repay $1,150 for the original loan of $1,000. Thus, despite having a higher interest rate, this type of loan will usually cost less than a loan of longer term.

Quick Funding

The time required to get the loan is much less than the amount of time you will have to wait for a long term loan.

The reason is that when the repayment term for a loan is longer, it makes the loan riskier for the lender and as such, the underwriting process is more stringent and thorough.

On the contrary, lenders consider short term loans less risky due to their short repayment period, the application process is easier, and you get quick funding.