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Differences between Short-Term Loans and Long-Term Loans

short term bad credit loans

Nowadays, everyone considers getting a credit for one reason or another, no matter if we’re talking about long-term or short-term loans.

Most of the time, you start considering a loan in moments of financial crisis, or because you must satisfy some individual needs. No matter your reasons, there are plenty of private companies or public institutions ready to present you their offer. Now, it is up to you to choose whether long term or short-term loans are what you’re looking for. This article will help you understand the differences between them and decide which one is the best for your needs.

Short-Term Loans – Pros and Cons 

Usually, short-term loans need to be repaid in two, three years. Most people use this type of credit for emergency situations such as car repairs or unexpected bills, or maybe for more fun situations, such as a vacation.

One of the most known short-term credits is the payday loan. This is a cash advance on your salary and arrives in your bank account on the next payday. You can borrow up to $2,000. The payday loans are accessible and with very few requirements. Unlike long-term loans, it takes maximum 48 hours to receive approval and no one checks your credit score.

If you need more than $2,000, then you should consider a flexible loan. This is a credit-based loan that you need to completely repay in 12 months. You can borrow up to $25,000.

What you need to keep in mind is that the interest rate on short-term loans is usually higher than long term loans.


  • The process of applying for short-term loans is simple, especially if you opt for online loans. You don’t even have to leave the comfort of your own home to apply for the loan. You can do it from your computer, as there are plenty of payday loaners online.
  • Everything moves at the speed of light. Well, not exactly the speed of light, but you get the general After you apply for the loan, the money will be in your account within 24 hours.
  • They are great for emergencies. Usually, you have to repay them in 8-24 days, or on your salary day.
  • Even if you have bad credit score, you will still be eligible to receive the money. As long as you have a steady income and no other outstanding payday loans, you are good to go.


  • You can only borrow a small amount of money. Usually, this sum is around $2,000, but if it is your first time taking a short-term loan, you will probably be allowed to borrow less than that. After you prove your lender that you are a good client, you will be able to increase the amount.
  • Short-term loans come with huge interest rates. Actually, the shorter the loans, the higher the interest. The annual interest rate can get to about 400%.

 Long-Term Loans – Pros and Cons

 Long term loans are credit-based loans, taken on extended periods of time. For this type of loan, your credit score matters quite a lot. The better your credit score, the lower your interest rates will be. They can be both secured (requiring collateral) and unsecured (they do not require you to secure the loan with any assets). Unfortunately, unsecured loans have higher interest rates. Some of the most common long-term loans are: home improvement loans, mortgages, wedding loans, and even business loans. You can apply for the loan through banks or credit unions.

The amount of money you will be able to take depends on your income and credit history. 


  • Because long term loans spread over an extended period of time, your monthly payments will be lower.
  • The interest rates for long term loans are more advantageous. Actually, banks compete against each other in offering the most appealing interest rate.
  • Let’s not forget about the money you are going to get. Compared to a short-term loan, the amount of money you will be able to borrow is considerably higher. Long term loans will help you buy a car, home, or start your own company.


  • Prepare yourself for a complicated and long application process. Compared to a short-term loan, applying for a long-term loan is time-consuming. You will have to complete numerous forms, you’ll have to talk with a lot of people and ask for information… One thing is for sure, it’s going to be exhausting.
  • Even if the monthly payments are quite low, if you add up all the interest rates you are going to pay, you might notice that the final repaid amount might be double the loan or even more.

Whether you are interested in long term or short-term loans, you can talk to our credit specialists at Bad Credit Loans. They will help you take the best decision.