A short-term loan may be your best bet
Are you just a little short of cash right now? Something’s come up, and you just don’t have the cash on hand to take care of it? Or maybe it’s an opportunity you won’t be able to take advantage of without a quick infusion of money that you’ll pay back quickly? You need a short-term loan.
There are some people who can spend their way through any emergency, and are perpetually in the right financial position to move quickly when doing so benefits them. But the rest of us need a little help sometimes. And sometimes the best kind of help is from a short-term loan.
A short-term loan isn’t appropriate for all purchases or situations, but for some it’s exactly right. For instance, if you’re a small business owner who needs to increase inventory before the holiday shopping season, a short-term loan that can be paid back in January will bridge the gap.
Broken equipment—at home or the office—has to be replaced immediately; coolers that conk out on February 13th can put a florist out of business, and a household without a functioning stove will quickly run up restaurant tabs that exceed the cost of appliance replacement. Again, a short-term load can make things right in a hurry.
Used wisely, credit cards are a lot like taking out a short-term loan. They allow consumers to buy airline tickets online, and pay off the card balance immediately.
A short-term loan shouldn’t be used for larger purchases like real estate, construction equipment or automobiles; in those scenarios it makes more sense to take out a lower-interest long-term loan that doesn’t have prepayment penalties.
The exception would be if the buyer has certificates of deposits or other financial assets that will mature soon, but aren’t immediately liquid. Or, a short-term loan makes sense for a homeowner who intends to replace furniture with a soon-to-arrive tax return. If the furniture goes on sale a week before the tax return is expected, it makes sense to take advantage of the savings by using a short-term loan if there are no prepayment penalties.