Did you know that the average Canadian owes over $70,000 in debt?
Long story short, everyone has some sort of loan. Either you’re paying off a home, a car, or something else. But sometimes you need a bit more than these big loans to squeak by for another month.
Short-term loans are means of staying on your feet without getting deeper into debt. But if you already have thousands in debt, you may be skeptical about taking on any more.
In this guide, we’ll discuss what a short-term loan is, and how long it takes to pay it off.
What Are Short-Term Loans?
As the name implies, a short-term loan is one that you pay off in a short period of time–usually a year or less. You can get a short-term loan with conditions that last for a few weeks or less.
To make this possible, short-term loans often don’t involve collateral. This means there’s a lot less risk involved if you default or cannot make the payments on time.
However, short-term loans do tend to have a much higher interest rate. That said, you’re paying off the loan in a timely manner. That interest won’t hurt as much as a long-term loan.
They also tend to be a smaller amount, often less than $2,000. If you need a loan for much more than that, then you must take a look elsewhere for fast loans.
What Are Short-Term Loans For?
Short-term loans are for anything you need. Some people use them to pay off a sudden spike in bills or to cover emergency charges.
Many loans require that you use them for a specific purpose. To apply for a car loan, for example, you’d need to apply that money to the car payments. A short-term loan is money given to you to spend at your own discretion.
There are several types of short-term loans. The following are just a few:
- Payday loans: these are the briefest loans since you need to pay them back before your next paycheck
- Car title loans: using your car as collateral, you take out a loan worth 25-50% of its value on the market
- Bank overdraft loans: these are loans to help you avoid overpulling from an empty bank account, similar to a payday loan
Of course, these are not all of your options. Fast loans come in many sizes and flavors, giving you options if you need money now.
How Do You Get a Short-Term Loan?
First, you need to find fast loans in Canada. These tend to be online loans or no credit check loans that you can obtain from the comfort of your home.
Short-term loans can be helpful since they:
- Are fast to approve: it often takes minutes (sometimes seconds) to get approval
- Don’t always require collateral: you won’t need to put up your mortgage or car title to get one
- Provide the money fast: you won’t have to wait more than 24 hours to get the money
- Have low credit requirements: if you don’t have good enough credit for a better loan, short-term loans can help
Often you only need employment proof such as pay stubs, bank account information, and a driver’s license.
How Long Does it Take to Pay off Short-Term Loans?
Now the question of the hour: how long will the average person need to pay it off? This is, after all, a short-term loan that won’t last longer than a year. Failure to pay it off in the timeline risks your credit and possibly your collateral.
How fast you pay it off will depend on a few things:
- What the interest rate is
- How big your monthly payment is
Let’s discuss a few tips for paying off your loan faster.
Prioritize Your Short-Term Loan Payments
Short-term loans have a much higher interest rate than long-term loans. As such, they can accrue far more interest in a much shorter period of time. Meanwhile, your biggest long-term loans accrue much less interest in the same period.
Focus on paying off short-term loans first. If you prioritize long-term loans, then you may get much deeper into debt.
Everyone loves to splurge, but when you’ve got loans, focus on those. It’s no fun to cut back on eating out or going to the movies. But financial stability is much more valuable in the long run.
With loans, every bit counts. There’s nothing stopping you from making big payments that take out a loan in one fell swoop!
Pay More Than the Monthly Minimum
The key to paying off any loans is to pay more than the minimum. The minimum is often so small that it only covers interest. It might not even take a dent out of the principal.
It will require some sacrifice on your part, but you’ll be glad you did. Shelling out just a few more dollars per month will be worth the cost. You’ll pay off your short-term loan sooner.
Speak With Your Loan Provider
Sometimes, you may be able to negotiate more favorable conditions for your loan. This could include doing interest-free installments for the first few months. Creditors understand your situation and will likely have options to make paying it off go faster.
Get Your Fast Loans in Canada With EasternLoans
No one wants to take out another big loan, but sometimes you need enough money just to get by. A possible solution is to take out a short-term loan. Short-term loans do have higher interest, but their shorter timeframe means you can pay them off in a shorter period of time.
EasternLoans is Canada’s leader in online loans and no credit check loans. Apply for a loan today and get yourself back up on your feet!