{"id":566,"date":"2022-03-26T10:45:00","date_gmt":"2022-03-26T10:45:00","guid":{"rendered":"https:\/\/blog.paymeindia.in\/?p=566"},"modified":"2024-09-04T07:10:26","modified_gmt":"2024-09-04T07:10:26","slug":"difference-between-long-term-and-short-term-loans","status":"publish","type":"post","link":"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/","title":{"rendered":"Difference between Long-term and Short-term Loans"},"content":{"rendered":"\r\n<p class=\"wp-block-paragraph\">The term loan is a borrowed amount for a fixed period that is paid back with interest. Loans may vary from 30 days to 30 years, the period to repay the loan amount is agreed between the lender and borrower.\u00a0Based on the repayment tenor of loans, we can categorize them into short-term and long-term loans. Long-term and Short-term Loans may refer to the tenure of repayments. <strong><a href=\"https:\/\/www.paymeindia.in\/blog\/reasons-to-apply-for-a-short-term-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">Short-term loans<\/a><\/strong> are paid back within a few months or a year. Long-term loan payments can remain for several years to many years (10-15 years). The rate of interest on loans may be fixed or floating in nature.<\/p>\r\n\r\n\r\n\r\n\r\n\r\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#differences-between-short-and-long-term-loans\" >Differences Between Short- and Long-Term Loans<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#loan-amount\" >Loan Amount<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#repayment-tenure\" >Repayment Tenure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#interest-rate\" >Interest rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#credit-score-requirement\" >Credit Score Requirement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#loan-approval-time\" >Loan approval time<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#documentation\" >Documentation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#apart-from-long-term-and-short-term-loans\" >Apart from long-term and short-term loans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/#conclusions\" >Conclusions<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"differences-between-short-and-long-term-loans\"><\/span><strong>Differences Between Short- and Long-Term Loans<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Before opting for a loan, you need to understand the fundamental difference between short-term and long-term loans. Some prime difference between them is listed below:<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"loan-amount\"><\/span><strong>Loan Amount<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">The main distinction between long-term and short-term loans is the amount loaned to a borrower. The higher the loan amount, the more time it will take to repay it, in most cases. Short-term loans make repayments effortless and without going into debt.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"repayment-tenure\"><\/span><strong>Repayment Tenure<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Short-term loans are generally for 1 to 5 years, whereas for long-term loans, the period may vary between 10 to 20 years. The lengthy repayment time allows a business to spread its debt over a more prolonged period.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"interest-rate\"><\/span><strong>Interest rate<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Usually, a high-interest rate is charged on short-term loans to recompense for a short repayment period. As short-term loans are offered without any collateral or assets, it makes it riskier for lenders in case of default repayment.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"credit-score-requirement\"><\/span><strong>Credit Score Requirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">In the case of short-term loans, a user with a lower <strong><a href=\"https:\/\/www.paymeindia.in\/blog\/how-to-increase-cibil-credit-score\/\" target=\"_blank\" rel=\"noreferrer noopener\">credit score<\/a><\/strong> can avail themselves of loans. Applications with a lower credit score get rejected while availing long-term loans.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"loan-approval-time\"><\/span><strong>Loan approval time<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">The main reason borrowers apply for a short-term loan is that they\u2019re disbursed swiftly with minimum documentation. Long-term loans usually take a longer time to be disbursed. Short-term borrowings are approved within 24 hours, which is almost impossible in the case of long-term loans.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"documentation\"><\/span><strong>Documentation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">In long-term loans, documentation required is heavy as a high amount is lent, they are approved only when all the <a href=\"https:\/\/www.paymeindia.in\/eligbility-criteria\" target=\"_blank\" rel=\"noreferrer noopener\">eligibility criteria<\/a> are met and also the creditworthiness of the borrowers is thoroughly assessed. Short-term loans are offered with minimal documentation.\u00a0<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"apart-from-long-term-and-short-term-loans\"><\/span><strong>Apart from long-term and short-term loans<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Apart from short-term and long-term loans, some loans can either be short-term or long-term loans or about in-between. A car loan is an example of this category. This can be either be a big amount or smaller amounts depending on the arrangement.<\/p>\r\n\r\n\r\n\r\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"conclusions\"><\/span><strong>Conclusions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Eventually, selecting between short-term vs. long-term loans depend on the specific needs of your business. Both short and long-term loans have different advantages and are supposed to serve several wants. It&#8217;s foremost for borrowers to understand the need to be fulfilled. In a circumstance of urgent financial need and you are sure to repay a loan within a short period, <a href=\"https:\/\/www.paymeindia.in\/short-term-personal-loan\"><strong>short-term loans<\/strong><\/a> would be an ideal match. Certainly, where you need a longer period to pay your loan in small payments, then long-term loans would be the most suitable choice.<\/p>\r\n","protected":false},"excerpt":{"rendered":"<p>The term loan is a borrowed amount for a fixed period that is paid back with interest. Loans may vary from 30 days to 30 years, the period to repay the loan amount is agreed between the lender and borrower.\u00a0Based on the repayment tenor of loans, we can categorize them into short-term and long-term loans. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":567,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_titles_title":"Difference between Long-term and Short-term Loans","_seopress_titles_desc":"In this article, Before taking a loan, let us understand the basic difference between short term and long term loan.","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"none","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"https:\/\/www.paymeindia.in\/blog\/difference-between-long-term-and-short-term-loans\/","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"both","_seopress_redirections_param":"","_seopress_redirections_type":301,"_seopress_analysis_target_kw":"loan","_seopress_news_disabled":"","_seopress_video_disabled":"","_seopress_video":[],"_seopress_pro_schemas_manual":[],"_seopress_pro_rich_snippets_disable_all":"","_seopress_pro_rich_snippets_disable":[],"_seopress_pro_schemas":[],"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8],"tags":[14,62,91],"class_list":["post-566","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-loan","tag-apply-short-term-loan","tag-long-term-loan","tag-short-term-loan"],"blocksy_meta":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.paymeindia.in\/blog\/wp-content\/uploads\/2022\/03\/Difference-between-Long-term-and-short-term-loans.jpg?fit=800%2C450&ssl=1","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/posts\/566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/comments?post=566"}],"version-history":[{"count":3,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/posts\/566\/revisions"}],"predecessor-version":[{"id":268352,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/posts\/566\/revisions\/268352"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/media\/567"}],"wp:attachment":[{"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/media?parent=566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/categories?post=566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paymeindia.in\/blog\/wp-json\/wp\/v2\/tags?post=566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}