Since our last post from earlier in the month, we hope you’ll have learnt a bit more about the types of loans available to you in secured and unsecured loans. Today we’re looking to expand your knowledge on loan types and help you to understand when you might be better off searching for a shorter – or longer – term financial agreement.
Many businesses will, at some stage or another, require a cash injection of some kind to move their business forward. Whether you need a loan which demands a more extended repayment period, or less-so, all depends on what the loan is going to be paying for and what the amount is. Other factors may also contribute to your decision, including your credit score.
Short-term loans generally, carry with them higher monthly repayments, because the loan is divided into fewer repayments. Because the amount is being paid off quicker, it usually means that the interest amount you pay as a result, is lower. This means the total repayment amount is less than with a long-term loan. An example of when a short-term loan might be worth applying for might be if you were required to purchase additional resources or equipment, for a short-notice project.
Long-term loans, alternatively, mean much lower monthly repayments, and on top of this lower interest rates. However, because the agreed repayments are spread out over an extended period, the amount you pay back in total can be higher than a short-term loan. It is generally considered harder to secure a long-term loan, and this is particularly true if your credit score isn’t great. You might be better off pursuing a long-term loan if you were looking to open a second premises for example, or were looking to support the completion of a gradual project.
There are several scenario’s where both types of loan could be more beneficial, but for an expert analysis of your particular circumstance, Simply call 01273 961755.