What Are the Pros and Cons of Short-Term Loans?

When you need money for your business, property or some vital equipment, a short term loan is an effective way to help you seize the moment. And with the right professional, getting secure short-term finances doesn’t have to be stressful.

At Hodgestone Finance, our expertise in the short term loan space allows us to source and structure quality loans for businesses across Australia, but before you apply for one, you need to consider if this type of loan is really best for your needs. This blog will detail the benefits short term loans can provide and the risks associated with them, so you can make an informed decision about the best way to finance your business.

What Exactly is a Short Term Loan?

If you aren’t familiar, a short term loan is exactly what it sounds like–an amount of money you receive quickly from a lender and pay back in the short term. There won’t be an exact length or amount that defines your short term loan, but they will almost always need to be paid back faster than a traditional loan.

This can be in a few weeks or months, but not usually any longer than one year. Because of the shorter repayment time, short term loans will often use fixed rates, rather than variable ones.

At Hodgestone Finance, you can choose between a great range of short term finance options, which include:

• Bad credit short term loans
• Low doc and non-conforming short term finance options
• Short term bank loans
• Short term bridging and property loans
• Private and 2nd tier short term lender finance

Do you need short term loans in Brisbane, Melbourne or Sydney? The professional team at Hodgestone Finance is ready to help.

The Pros of Short Term Loans

Let’s get into some of the good things about short term loans in Australia from Hodgestone Finance!

Short Term Loans Are Easier to Get Than Traditional Loans

Applying for a large loan can be a time-consuming and complicated process–after all, it’s a lot of money that needs to be safely recorded, transferred and monitored. However, short term loans are much easier to access, which can be useful because people often need them in a hurry. 

At Hodgestone Finance, we can reach a settlement regarding your short term loan inside one week with a valuation. You won’t need a stellar credit score or have to share an excessive amount of details with us to get your short term loan, although a suitable exit strategy will need to be in place for your loan to be approved.

You Can Access Your Funds Quickly

You can expect a fast turnaround time when you successfully apply for a short term loan with Hodgestone Finance. Our panel of lenders boasts impressive flexibility that can result in you receiving your funds quickly, which is important when:

• You are between paychecks and need cash to stay afloat
• You have come across an opportunity that you cannot afford to miss out on
• You require refinancing in a short period of time
• You need liquid funds for a few months

We can even arrange same day settlements, as long as a valuation that has been previously offered is accepted by our Short Term Funders.

Short Term Loans Are Accessible to Those with Bad Credit

A bad credit score will usually prevent you from successfully receiving a loan, but short term loans at Hodgestone Finance are different. No matter your credit history, we can make sure you have access to the type of loan you need.

Our bad credit short term loans can be just what you need to get back on your feet and start steering your life back on track. Bankruptcies or defaulting on a loan can all lower your credit score, meaning banks and lenders may make it difficult to secure a loan with them, or if you do, there are high interest rates and harsh penalties for not making your repayments on time.

Short-term loans not only give you the money you need but also provide an opportunity for you to improve your credit score by making your repayments on time.

The Cons of Short Term Loans

Short term loans aren’t for everyone. Here are some points to keep in mind when deciding if this type of loan is best for your needs.

There Are Limits on the Amount of Money You Can Borrow

The small dollar amount of a short term loan means they aren’t always right for your circumstances. Short term loans can help you purchase equipment or an area of development, or perhaps help keep your business afloat for a short time. But you won’t be able to borrow the amount needed to make a large purchase, like that of a property, or for a dire financial situation.

If you need a substantial amount of money, you’ll want to look into a more traditional loan. While these can be a little more cumbersome to get, they will give you the money you need without an aggressive repayment plan or interest rate.

Short Term Loans Have High Interest Rates

Speaking of interest rates, short term loans tend to have high ones. This is because your lender will need to make sure you pay back the loan, and high interest rates are a way they can try to guarantee this.

This means that the longer you take to pay back your short term loan, the more money you will need to pay back overall. If you are concerned that you won’t be able to meet the rising costs created by the interest rate on your short term loan, then this type of loan probably is not for you.

You Will Only Have a Short Time to Pay Back Your Short Term Loan

The ‘short term’ part of ‘short term loan’ refers to the fact you won’t have much time to pay it back to your lender. This won’t always be a problem, depending on your situation, but if your timeline is only a few weeks or months, you won‘t have much wriggle room when it comes to making your payments.

Larger traditional loans allow you to spread your repayments out across many years, but the compressed time frame of a short term loan means that if you are struggling to repay your loaned money, you won’t be able to spread the cost out across several separate payments. Forcing yourself to make these payments can leave you vulnerable and drain your bank account quickly!

Are you interested in short term loans in Bendigo, Geelong or Gippsland? Hodgestone Finance can secure you the right loan, no matter your financial history.

What Other Types of Loans Can I Get From Hodgestone Finance?

If you think a short term loan isn’t for you, then we encourage you to explore some of the other types of loans we offer at Hodgestone Finance. 

1. Commercial Loans: Do you need a loan to help grow your business or keep it strong? Choose from any of our commercial loan types, which can include loans for mezzanine financing, construction lending, vehicle loans, business loans and property loans.

2. Home Loans: When it’s time to buy a new house, unit or apartment, you’ll need the right type of loan. As well as short term loans, we also offer unsecured loans and can help connect you with the right private lenders, also known as non-bank financiers.

3. Equipment Loans: Need some help paying for large equipment you need for your business? We can help by providing truck, excavator and farm equipment loans.

We can also assist you if you are interested in starting or growing your investment property portfolio. Hodgestone Finance can help you access high-quality property before it hits the general market and will perform all the required analyses to ensure that you are making a smart purchase.

Where Can I Get Good Short Term Loans In Australia?

No matter what type of loan you need, the friendly team at Hodgestone Finance is always eager to assist you. Secure the perfect short term loan for your needs by getting in touch with us now!

You can call us on 1300 463 439 or make a quick enquiry using our online form. While we are based in Melbourne, we also have offices in Sydney and on the Mornington Peninsula and can assist you with loans across the country.

Our vision of success and connections with reputable stakeholders allows us to always help you find the right loan for your situation. As a National Finance Broking & Consultancy Firm, we can help you with finance solutions no matter where you live in Australia.