Expanding Financial Scope during Crisis with Short Term Loans in Australia

Borrowers will have a few important decisions to make when they are planning to apply for a loan. Delays in obtaining urgent finance from traditional financial sources such as banks can result in great loss of business in Australia. This type of finance is one of the best ways to get money that borrower needs on a short-term basis.

Some financial institutions in Australia provide businesses with short-term financing solutions that are precisely designed to help borrowers to facilitate urgent settlements.  Availing short term finance is associated with several benefits and that are mentioned below.

v  Benefits of short term finance in Australia

1.    Quick money

Short term loans usually take less time to process by financial institutions in Australia. Therefore, if the borrower needs quicker access to loan amount, they should opt for short-term financing solutions in Australia.

2.    No collateral

 It is important to understand that some short-term financing solutions in Australia may not require any of their property as collateral. This would not apply to commercial mortgages.

3.    Less interest

With shorter term finance, borrowers in Australia will be paying everything back quicker with less interest amount. Borrower can save money in the long run, even if the interest rate for short-term finance is actually higher than with a long-term loan. 

4.    Flexibility

Borrowers can find some very flexible terms to work with many short term financing options in Australia.  For example, borrowers in Australia may be able to just make interest payments each month and then pay off the balance of the finance at a later date.  This type of flexibility in payment allows borrows to find a loan that fits with their current financial situations.

5.    No long term commitment

One of the major problems associated with many short term financial solutions in Australia is that borrower have to commit to something for a long period of time. Finances that last for many years can be intimidating prospects to worry about for any businesses in Australia. Borrowers can focus on the immediate future only, with the short-term financing solutions in Australia.

6.    Easy credit approvals

Many lenders in Australia do not put a heavy emphasis on the credit history of the borrowers, while approving short-term loans. Lenders give credit approval to the borrowers, as long as they have a steady income source and do not have any other outstanding loans.  This allows many borrowers in Australia to avail finance when they need it.

7.    Credit score boost

Acquiring short term loans and paying it off in a timely manner is a good strategy to improve the credit score of the borrower quickly.

8.    Predictable

It can be difficult for estimating where the finance of borrowers will be in the distant future. Nobody knows for certain how the economy will be in 20 or 30 years. Borrowers will still be responsible for payments far into the future, regardless of what their financial situations is. It is much easier to predict and budget for a short-term finance.

9.    Lower stress

Owing money for a long period of time and watching interest accrue takes an emotional and psychological toll on borrowers. They will have paid off their debt much quicker and be free of that burden, with a short term finance.

v  Limitations of short term finance

Apart from having several benefits, availing short term financing solutions in Australia is associated with several drawbacks. One should consider the benefits and limitations of short term finance, before applying for short term finance in Australia.  

1.    High rate of interest

One of the biggest drawbacks that borrowers have to consider while applying for a short term finance is that the interest rate is going to be higher than long-term loans. In some financing cases in Australia, the interest rates for short-term finances can be quite a bit higher than long-term finance, which makes it difficult for borrowers to make timely payments.

2.    Add to financial problems

Many times in Australia people take out short-term financing solutions because they are short on cash but they don’t have any more money when the loan is due.  This can just compound the financial problem and get the borrowers deeper in debt.