The Main Types of Short-term Loans
Short-term loans gained much popularity in the United States. They help to cover basic needs of individuals and organizations. It is one of the most beneficial financial product. It is the cheapest loan that exists.
Payday loans are distributed not only by American banks. The most beneficial personal loans are issued by the financial organization. One can get the cheapest payday loan from them.
Types of Credits
Initially, short-term loans were developed to reduce poverty. Very soon this financial product started to fulfill a different function. Payday loans aim to cover basic needs. There are two types of entities that can get a personal loan:
- A natural entity. People with moderate income in the US are the main borrowers. They take the biggest amount of small loans yearly. There are many reasons for it. Taking a credit is easier than taking a long-term loan. The application requirements are also simpler.
- Juridical entities. Legal entities take personal loans to cover some of the operational expenses. Financial institutions distribute loans to such organizations for a lower interest rate than usual. It is a reason why legal entities apply frequently to get small loans.
These are the main types of entities that can apply for a credit. It’s good to know that small loanss are distributed only to entities that have legalized in the US. A person has to show an American passport. An institution has to be registered in the United States. According to types of applicants there credits are classified in a next way:
- Individual loans. These personal loans are distributed to individuals. Households with moderate income become the key borrowers from financial companies. They are issued around 600 dollars. If a person wants to get a higher small loans, he has to pay more for short-term loan.
- Emergency short-term loans. These are special loans. They are issued to individuals in case of emergency. If a person is hospitalized and needs money quickly, it is reasonable to get a small loan. The interest for such type of borrowing is higher than usual.
- Personal loans issued to institutions. Very often private and public institutions need to get additional financing. Very often getting extra money can save an organization from closure. Legal entities in America can apply for personal loans . They will get from 2 000 – 5 000 dollars. Legal entities will be asked to return a personal loan in some months after issuance. The interest rate is quite moderate. It makes many legal entities to apply for this type of short-term loan.
These are the main types of personal loans that exist. It is good to know that application requirement to get a personal loan is lower compared to a long-term credit. It is possible to negotiate with a borrowing company on terms and conditions. If a person or an entity takes a small loan and returns it in time, the interest will be very low. It is one more reason to enjoy crediting.