
What Exactly Is A Short Term Loan?
With inflation rising and unexpected expenses piling up, you might find yourself in need of quick cash. That’s where short-term loans come in.
The basic definition of a short-term loan is a loan that can be paid back quickly and is used to meet an immediate need, such as a high utility bill, a sudden repair, or a co-payment to see a doctor.
Life can introduce unexpected expenses that force you to find quick emergency loans. This guide explains what they are, who qualifies, and how to apply with Tennessee Title Loans, Inc.
What Are Short-Term Loans? Your Complete Guide!
In this article, you'll find out everything you need to know about short-term loans and whether they are the right borrowing option for you.
The Definition Of A Short-Term Loan
While the general definition holds, there is a more legal definition of what is a short-term loan. The wording "short-term loan" refers to how quickly these loans can be paid off.
The consensus is that these loans take only six months to a year to repay. Those that take longer to repay are called medium-term loans or long-term loans. The longest a short-term loan should take to pay off is 18 months. For instance, a three-year car loan is medium-term, while a mortgage is long-term.
Understanding Short-Term Loans vs. Long-Term Loans
What is a short-term loan? There are various term loans, and they all fall into the type of repayment expected. Many people use credit cards as long-term loan solutions, but, in reality, they fall under short-term loans. That's because credit card users should pay them off within a year rather than carrying the balance for long periods.
To understand what a short-term loan means, you should know it covers a lot of loan products. Other types of loans, such as title, payday, signature installment, and credit lines, fall under short-term loans. Most of those are issued with the expectation that they will be repaid quickly.
Qualifying For A Short-Term Loan
Short-term loans are easier to find out if you qualify than other types because of the smaller amounts issued and the shorter repayment periods. The general requirments for getting a short-term loan are as follows:
- Your most recent pay stub or proof of income
- Your driver’s license or state-issued ID
- A blank check from an active checking account in your name
Some traditional banks may be stricter about issuing loans, so they may also do credit checks. Thankfully, Tennessee Title Loans, Inc. welcomes borrowers from all credit backgrounds, and we do not consider your credit history in determining your eligibility for the loan.
Finding A Lender That Offers Short-Term Borrowing Options
Short-term loans are offered by many traditional institutions like banks and credit unions, fintech companies, and private lending companies like Tennessee Title Loans, Inc., when you need help. Tennessee Title Loans, Inc. has three types of fast cash loans available, including payday loans, vehicle title loans, and credit lines. Each loan offer has a different range of maximum amounts allowed and the required items to qualify for a loan.
- Title loans—Our loan amounts range between $300 and $2,500 and require a government photo ID, a clean vehicle title, the vehicle available for inspection, and a validation of income.
- Payday loans—Our loan amounts have a maximum amount of $400, and requirements include a picture ID from the government, a pay stub, and a pay stub from an active checking account listed in your name.
- Line of credit loans—Also known as flex loans, these loans come with a maximum amount of $4,000 at Tennessee Title Loans, Inc. Requirements are an ID from the government, a clear vehicle title, your vehicle itself, and proof of income.
The Pros and Cons of Short-Term Loans
Short-term loans, like title loans, payday loans, and flex loans, are designed to provide quick financial relief in emergencies. While these emergency loans can be lifesaving in certain situations, they also come with some risks. Here's what you need to know about short-term borrowing options before you apply:
Pros
- Fast Access to Cash
Most short-term loans, including title loans and payday loans, provide money the same day or by the next business day, making them ideal for urgent expenses like medical bills, car repairs, or unexpected emergencies. - Minimal Credit Requirements
Many lenders offering title loans for bad credit or payday loans don’t require a high credit score. Some don’t check credit at all, making loan options like these accessible to people with poor or no credit history. - Easy Application Process
Whether you apply for a title loan online or in-store, the process is usually straightforward and fast, often providing a loan decision within 30 minutes. - Flexible Use of Funds
Borrowers can use the funds for any purpose—there are no restrictions on how you spend the money. - Secured and Unsecured Options
Title loans are secured by your vehicle, while payday loans and line of credit or flex loans are typically unsecured. This allows you to choose the option that suits your situation best.
Cons
- High Interest Rates and Fees
One of the biggest drawbacks is the high cost of borrowing. Because short-term loans don’t typically rely on credit for approval, they can come with steep interest rates, making repayment a challenge. - Risk of Losing Collateral (Title Loans)
With title loans, your vehicle title serves as collateral. If you’re unable to repay what you’ve borrowed and default on your loan, you risk losing your car. - Short Repayment Periods
Many payday loans require repayment within a short timeframe, sometimes as little as two weeks, potentially leading to financial strain or repeat borrowing. - Limited Loan Amounts
Some short-term loans offer smaller amounts of money than others, making it harder to cover larger financial emergencies.
Is a Short-Term Loan Right for You?
Short-term loans like fast cash title loans, payday loans, and flex loans can be helpful in emergencies, especially for those with limited access to traditional loan options. However, they should be used with caution, and it’s important to have a clear repayment plan in place to avoid any unnecessary financial stress.
If you’re considering one of our fast cash loans, be sure to only borrow the loan amount you need and can afford to make repayment on.
How Does The Process Work?
Applying for short-term loans with Tennessee Title Loans, Inc. is straightforward.
Here’s how it works:
- Submit the online form on our website.
- A store official will follow up on your request by calling you to explain how that specific loan works and the rest of the process.
- An appointment will be made to complete the process. You can ask a loan representative for details when they call.
- Payday loans, title loans, and flex loans all require a visit to one of our nearby locations to complete the application process.
The entire process can take as little as 30 minutes. If approved, you’ll receive your emergency funds the same day or the following business day.
Fill Out Our Online Form For Emergency Loans Today!
What is a short-term loan? It's a quick loan to pay for emergencies that you can repay quickly. You can find out whether a short-term loan option with Tennessee Title Loans, Inc. is a good option for you by completing the online form. It's simple to fill out and only requires the most basic information.
See if a short-term loan can help you today by filling out the online form on our website!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.