Differences Between Short Term Loans And Personal Loans

Differences Between Short Term Loans And Personal Loans

Many times the money we earn every day and every month does not entirely satisfy our needs and wants.

You could, be required to get a loan for example to start a business or to expand an existing business or to settle for some emergency.

Short Term Loans And Personal Loans

There are different types of loans that lenders offer that one can choose to borrow. let us look at a short term loans and a personal loans, what they are and their differences.

Differences between short term loans and personal loans

A short term loan is a relatively little amount of money usually borrowing for a short period at a high-interest rate. Which is paying back to the lender when the borrower receives their next salary or wages.

Short term loan lenders are widespread in Australia and registered by the Uniform Consumer Credit Code, UCCC. The main disadvantage of a short term loan is the high-interest rate of approximate 24% for every $100.

On the other hand, personal loan in Australia has quite friendly interest rates. A personal loan is a fixed amount of money borrowed and returns repaid to the lender over a set time and usually paid back in installments. Financial institutions such as banks mostly offer them. Personal loans Australia come at an affordable monthly repayment installment which you agree with your bank. It depends on the amount borrowed and time frame for repayment.

Several Types of Personal Loans

  • Secured loans – It is a loan you borrow to acquire an asset. Such as a house, a car or a property. The security of this asset is the asset itself. The financial institution can sell the asset to pay back the loan.
  • Unsecured loans – This loan does not need security. But a guarantor who guarantees the bank that you will pay back the loan.
  • Fixed loan – This one has a fixed interest rate until the loan repaid fully. The interest rate does not go up and down even if the overall rates change.
  • Variable loans – Here is the interest rates vary from time to time.
  • Overdraft – This type of loan helps you to withdraw more money than the available balance in your account. The interest is charging only on loan receiving.

In conclusion, if you need loans Australia, personal loans have better terms than short term loans.

You can make your informed decision.