Short term loans are for shorter period. But, it has been proved that short term loan are cheaper than long term loans, as the cost involved in them is less.

The term which describes whether the loan is short term or long term is the period for which it is availed. If it varies from weeks to certain months say up to one year, it will be regarded as short term loan on the other side, the period more than one year and up to 25 years will be regarded as long term loan. And as the period of loan increases, simultaneously its total cost also gets increased.

Short term loans are the best source to finance the immediate needs of a person. It can be either for paying bills, medical bills, consolidating debts or any other expenses.

Instant loan, pay day loan, cash advance loan or cash loans are the some of the short terms loans, which are available in the financial market.

Short term loans carry a high rate of interest. In this way the lender is able to make profit in shorter period too that way he balances the risk evolved in lending the short term loans. But, the borrower should negotiate with the lender in order to get the best deal with regard to rate of interest. The basic criterion which the lender takes into account before providing a loan to the borrower is:

Employment proof

Bank account

Flow of income

Ability to repay

After considering these factors, he approves the amount for loan. And repayment period and rate of interest also depends on these factors.

Short term loans can be secured and unsecured also. In secured short term loan, the person is obliged to place collateral against the amount. This will enable a person to pay low rate of interest. And in unsecured loan, there is no need to place collateral. This is the reason that in unsecured loan the person pays little higher rate of interest as compared to secured loan.

Generally, it is seen that people are refused for loan just because of their poor credit score. Short term loans can be availed by any person whether with good credit history or poor credit history. But, this doesnt mean that there is no difference between poor credit scorer and good credit scorer. The difference is that the person with poor credit score is obliged to pay higher rate of interest as compared to a person with good credit score.

Thus, to conclude we can say that short term loans gets approved faster, available to everyone and lastly they can be used for any purpose.