Everything You Need to Know About Less Expensive Short Term Personal Loans

What is a Short Term Loan Malaysia?

As indicated by the name, short-term personal loans are the special financing tools designed for a short tenure. These loans are preferable ways to fund a business because they help meet those temporary scarcities. Short-term business loans are also called bridge loans as they allow small business owners to solve their short-term financial issues.

They have a repayment term of one or two years and sometimes only a few weeks. These loans also charge high fees, interest rates, and penalties.

Common Types of Short Term Loans

Different types of short-term loans are there. Here we will discuss four common types of short term personal loans;

Payday Loans 

Payday loans are regarded as one of the most famous types of short term loan Malaysia. The lenders provide the highest amount of loans to the borrowers.

Lines of Credit 

Lines of credit act as a business credit card that offers a long-term repayment option. They do not demand a high credit score and have an interest rate of 8 to 80%.

Merchant Cash Advances 

The next on the list is merchant cash advances. It is another type of cash flow loan. This type of loan is quite expensive and can be a bit high on the pockets as the interest rate varies between 20 to 250%.

Procedure to Apply for Short Term Loan Malaysia

Here are a few simple steps in the process of getting a short-term loan.

Finding a Lender 

First, search for lenders near you. Do all your research and get all the essential information and payment details about the lender.

Fill the Application Form

The next step is to fill the application form and submit all the desired documents.

You will need the following documents.

  • Education history and credit reports
  • Criminal record
  • Personal bank statement
  • Business bank statement
  • Resume
  • Signed personal financial statements
  • Business plan
  • Individual and business tax returns
  • Financial statements
  • Proof of cash flow, balance sheets, and profit and loss
  • Business licenses and registrations

Where to Find a Short Term Loan Malaysia?

A short-term loan can be found at various online platforms and other places like banks, pawnshops, credit unions, and payday lenders.

Ways to Get Short Term Personal Loan with Bad Credit

Yes. You read it right. The majority of the lenders do not need a credit check, and it is possible to get a short-term loan with bad credit. However, the thing is that you need to pay high-interest rates and fees for this.

Another method that you can consult to get your loan approved is applying with a creditworthy cosigner. But only a few personal loan lenders offer this service.

Some Benefits of Short Term Personal Loan 

Here are a few advantages of a short term personal loan;

  1. The approval process of a short-term personal loan is speedy. They do not make you wait long.
  2. These loans are good options for various financial needs, like utilities, transportation, rent, food, and health emergencies.
  3. The application process for a short-term loan in Malaysia is also quite simple and easy, with little paperwork.
  4. These loans are easy to qualify as compared to other traditional loans. They do not require good credit for approval.
  5. These loans only require basic personal and business documents for approval.

Some Disadvantages of Short Term Personal Loan

Here are some of the cons of getting a short term personal loan that you need to know;

  1. Short-term personal loans are pretty expensive as they come with high interest rates and fees.
  2. These loans require frequent payments. You have to pay on a weekly or even daily basis.
  3. Another notable drawback is that short-term personal loans have a limited time to pay back.
  4. There is a high risk of being debt trapped in these loans.

Every loan has its pros and cons. Short-term loans are playing a vital role in helping people make their businesses survive during hard times. Before applying for this short-term personal loan, make sure to do all your research and clear all your queries to avoid further complications.