Benefits of Shorter Loan Terms
- Shorter loan terms save money overall, with higher monthly payments.
- Build equity faster due to larger principal payments.
- Lower total cost of the loan despite higher payments.
Caveat Loans
- Fast settlements and short-term durations (1-12 months).
- Secured against property ownership using a caveat.
Exploring Short-Term Loans
- Offer quick access to funds with minimal application requirements.
- Can be repaid within a year or less.
- Provide flexibility in repayment plans.
Types of Short-Term Financing
Short-term financing, designed to be repaid within a brief period (6 months to 1 year), serves temporary cash-flow gaps. Types include:
- Trade Credit
- Commercial Paper
- Secured Loans
Purpose of Short-Term Financing
The primary goal is to obtain working capital funds for short-term needs and smooth business operations, with an emphasis on quick access to funds, flexible repayment options, and higher interest rates.