How to Choose Between Short-Term and Long-Term Loans

Loans can be of great benefit to you for whatever purpose you should need them for. For somebody who does not know what a loan is, or has never heard of a loan before, a loan is when you borrow money from a company [a lender] for a fixed period and have interest applied to the initial sum borrowed. You pay them back monthly, yearly, or weekly, depending entirely on your plan. A plan can be tailored around a specific individual and their financial obligations, so no repayment plan is ever the same.

Loans come in many shapes and forms and can be short-term or long-term. Taking out a loan can be a great benefit, and this page will hope to tell you how you can choose between short-term and long-term loans, for whatever you need them for. It is important to remember that when taking out a loan, you must be cautious. Loans are not to be played around with, and if not taken seriously, can have massive financial implications and be a detriment to your credit score and your quality of life.

Here is how to choose between short-term and long-term loans.

Short-Term Loans

Short-term loans are of great benefit and can be used for a wide range of purposes. A short-term loan is often offered by a payday lender [same day loan providers]. These services pay the money directly into your account, often on the same day as your application. Short-term loans can be very beneficial if you have no immediate finances and have encountered a financial disaster. A short-term loan will often have much higher interest rates than long-term loans do. They are very beneficial, however, and according to, a loan provider, being guaranteed funds on the same day as your application can be a great way to remedy any emergencies. Short-term loans are a great aid.

Long-Term Loans

Long-term loans are a lot more complicated and are not paid on the same day, although often offer lower interest rates. A long-term loan will have a period in which your application will be considered; you will be required to meet a representative of the loan company who will assist you in your query and financially assess as to whether or not you would be viable to have the loan. A long-term loan is a lot more complicated but can be much better, depending on the person.

Which Is Best for Me?

The type of loan that you take out depends entirely on your situation and your personal circumstances. Some may be eligible for one loan and not the other. Assessing your personal situation and deciding which loan would be best suited to you is the best way to proceed and ensure that you get the best deal and best loan for your personal situation. Whichever loan you get, you must pay it back on time or you could face serious consequences on your credit report and in your personal life.

Credit Score

Your credit score will determine which loan you can get. Short-term loans often require a less ‘perfect’ score, whereas a long-term loan may require a perfect loan. Your credit score will be a determiner in which you are eligible for. If your credit score is particularly bad, you may not be eligible for either, in which case, you may find yourself unable to find a loan anywhere. You can check your credit score by visiting credit score providers. Use only verified websites to check your score and never give your details away to websites that are not secure.


The purpose of your loan is another determining factor that will help you decide between the two types of loans. If you need the loan for emergency bills or home repairs, a short-term loan may be best for you, as you will be able to pay it back quickly and borrow less. If you need it for larger purposes, such as the deposit on a house, or for a car, then a long-term loan may be best, as it will offer you better interest rates and will allow you to have a huge chunk of money at one time.


As stressed multiple times in this article, you must ensure you keep up to date with your repayments. Not repaying your loan back on time can be very harmful to your life and can see your home being repossessed and have you inundated with debt for the rest of your life.

Now, with the help of this page, you know the difference between short-term loans and long-term loans, as well as knowing which may be best for you. Think carefully and decide which loan is best for you if you even need one. Don’t gratuitously take a loan out.