Short-term loans are loans with a duration of less than 1 year. Short-term loans allow us to overcome unexpected purchases or other sudden expenses that are inevitable. They also allow us to acquire some products and services that we want or need, and we have not saved money to acquire them. Short-term loans allow us to acquire these products by splitting the payment into installments which must be in line with our payment possibilities.
Some examples of the applications of the short term loans Central Coast are:
• Personnel: the payment of studies of children (Masters, courses abroad, etc.), purchase of appliances or furniture, cars, motorcycles, vacations, etc.
• Commercial: they are usually requested to finance the company’s working capital, although they can also be requested for the purchase of specific assets such as vehicles, computers or furniture, or for carrying out renovations of the company’s facilities. In these cases, also enter the unsecured small business loan.
The short term loans Central Coast is formalized through a contract between the financial institution (lender) and the borrower, making the financial institution give it a certain amount of money, which is reflected in the loan contract together with the amortization table, which reflects the form and terms in which the principal and interest will be paid to the lender.
For the formalization of loans, the lender can ask for guarantees that guarantee the reimbursement of the agreed amounts. If we are talking about a loan granted to a company, the repayment period must be one year maximum, since in case of exceeding the year it is considered a long-term loan. They are usually formalized before a notary public for the purpose of serving as an executive title that allows the executive branch to be opened and an immediate seizure in case of non-payment.
The cost of a loan depends on the interest rate and the fees applied by the financial institution. The interest rate can be fixed or variable, applying, in this case, a differential over a reference index that is normally given by the governing entities of the financial sector. While the commissions that are applied can be of various types, such as study or evaluation fees, opening fees, cancellation fees, and early repayment fees.
The French amortization method is the most commonly used, defining a constant amortization rate throughout the loan period, with most of the loans being the monthly repayment period. Loans can also be formalized as long as future income is not formalized, such as subsidies, tax refunds, customer charges, deposit refunds, etc. in which case the usual amortization method is at the time of the realization of the income.
But the most important thing before going to the financial institution to request a loan, is the realization of a previous study of our ability to pay, so that if the applicant is a company we must analyze the cash flow, while if the applicant is an individual we must see if our income is sufficient to cover our monthly expenses once the requested loan fee has been added.