Short Term Loans vs Long Term Loans
If you are thinking about applying for a personal loan in the near future, you may be wondering if it is best to apply for a short term or a long term loan. There are multiple factors for you to consider when making this important decision. By taking a closer look at the options available to you, your budget and your goals, you may be able to more easily make a decision that is best for you.
A short term loan may have a loan term as short as a few days or as long as a year. A long term loan may have a term that extends for several years or even for several decades. Generally, you will find that short term loans have a higher interest rate and may not require the use of collateral. They may also have a lower loan amount and an easier prequalification process. However, these factors can vary significantly from one loan to the next, so it is important to review the details of any loan program before you apply.
In addition, you also want to take a closer look at your goals and your budget before making a decision about your loan request. With a short term loan, you may be required to repay the loan funds in full with interest charges within a few weeks or months. If you have a tight budget, this may be financially burdensome. A longer term loan may have payments that are easier to manage, but you are obligating yourself to take on a debt payment for an extended period of time. Before you apply for your loan, it is important to fully understand the benefits and drawbacks of each option available and to make a decision that is best suited for your needs and goals.
Payday Loans Laws in the USA
Payday loan stores have become common in the United States. While these stores gained popularity just a few years ago, their growth has slowed more recently. Payday loans differ from bank loans in a number of ways.
Private companies provide consumers with short-term loans. Usually those loans are much smaller than those that bank customers would get. Loans may be several hundred to several thousand dollars. After filling out an application, an approve recipient can walk out with cash immediately. Emergencies, holidays and poor credit are all reasons that consumers may apply for a payday loan despite high interest rates.
Payday loans are not without risks, however. The interest rates on these immediate loans tend to be much higher than those of bank loans. Payday loan companies often require some form of collateral; although, this is not always the case. The title to a vehicle is common, but some payday loan stores will allow loans simply by requiring the recipient’s personal information and bank account.
Typically, the consumer must leave a post-dated check with the store. After the maturity date occurs, the store will cash the check. This gives the consumer a set amount of time to accrue the funds to pay back the loan. This frequently happens on the next payday, hence the name of this type of loan and store. Washington is one state where payday loan companies must provide consumers with an option for an extended payment plan.
Regulation is done on a state level. 37 states allow and regulate payday loan lending. Opponents of payday loans state the high cost as one reason that payday loan stores are predatory. The federal government has instituted a law that states loans for military members cannot exceed an interest rate of 36%, but not every consumer shares this protection.