Short term small loans vs. Long-term personal loans – which suits you most?

Short-term small loans vs. Long-term personal loans

Many ads for online loans promote both short-term small loans and long-term personal loans. When consumers are unaware of the features of each type of loan, it can be difficult to choose between them. DLL will clear things up for you so that borrowing becomes easier and paying back – less burdening.

What Is a Credit Term?

Before choosing which type of loan suits you best, it is essential to understand the main difference between long and short-term loans. This is the credit term. The full term of a loan refers to the period from the commencement of use until the entire loan amount is repaid in full. It includes the period of use, grace period and maturity.

The period of use of a loan – is the period during which borrowers use the loan to pay for their expenses.

The grace period – is the period from the end of use until the beginning of repayment of the loan.

Maturity refers to the period during which the full payment of principal, interest, and commissions accrued on loan takes place.

Nowadays, lenders are ready to lend money for nearly any type of expense. At the same time, the borrower doesn’t need much effort to collect the few documents needed to get the loan approved and to subsequently regularly repay the debt.

The amount of the monthly payment and the final overpayment will depend on the established term of payment. This is the main difference between short-term and long-term loans.

Short-Term Loans Pros and Cons


  • Easy. You can access our site and fill out an application form.
  • Comfortable. Everything is done electronically, so you can apply in the comfort of your own home.
  • No paperwork. You don’t need to deliver documents to a bank or in-store lender.
  • Speed. You get the money in a very short time. If the loan gets approved, borrowers usually receive their money within 24 hours.
  • No collateral. There is no need to provide guarantees to the lenders – small loans are unsecured.
  • No commissions. You don’t pay commission, just the loan principal and fees.


  • Your approval is not guaranteed. There is a chance your request will not be accepted. The creditor examines your claim and decides whether or not to lend you the money.
  • Small loan amount. The amounts you can borrow are quite small, which means they can only help solve common daily problems or urgent needs.
  • High charges. Short term loans involve costly fees! That why you should have a good reason for taking a short-term loan.
  • Potential for a debt trap. Sometimes people take out a short-term loan without having a real need for the money. Consequently, they often find themselves facing large debt. Most of the downside of short-term loans can be solved by borrowing responsibly.

Most of the downsides of short-term loans can be solved by borrowing responsibly.

Long-Term Personal Loans – Benefits and Disadvantages


  • Larger amounts of money. This gives consumers the opportunity to receive a larger sum of money and to repay the loan in smaller installments.
  • Lower interest rates. The long-term loan offers a relatively low interest rate, compared with short-term loans.
  • Affordable repayment schedule. People have the freedom to pay back the money based on their financial situation. If their income is low, they can choose a longer term to pay back the loan.
  • Build credit history. Long-term personal loans can help rebuild a bad history and improve credit score, as long as payments are on time and the lender reports it to the reporting agencies.
  • Less paperwork. Applying for an online long-term personal loan is easy and fast. A couple of clicks and several answers and you are all done!


  • Large overpayment. As a rule, with a long-term loan, a large amount of overpayment is obtained, which can sometimes equal the amount of the loan itself. The interest rate is calculated based on credit score, so increasing your score it might ensure lower interest rates.
  • Need of collateral for large loans. If your loan is relatively large, you may be forced to pledge your goods (home, property, car). Collateral is used as a guarantee for the lender that you can repay the loan.
  • Stress and anxiety. An unavoidable consequence of having to pay long-term loans is your psychological state. These types of loans involve a lot of stress and anxiety if something goes wrong and you find yourself unable to pay.
  • Risk of hurting your credit score. Long-term loans can hurt your credit score if you miss payments.

Final thoughts

Both short and long-term loans have their perks. Depending on the situation you are dealing with, each of them may be appropriate. When choosing between short and long-term loans, keep in mind the following:

  1. Whether the situation is an actual emergency;
  2. How much money is needed to solve a problem;
  3. Whether the repayment schedule fits your budget;
  4. Whether your income allows you to pay back the loan;
  5. nterest and fees;
  6. Now you understand what loan type fits better for your case – so choose the best option! But be careful and never borrow more than you can pay back.

    References and Sources

    1. The Advantages of Long Term Loans. Retrieved from

    2. Long-Term Bank Loans: Advantages & Disadvantages. Retrieved from

    3. Long-term Loans Vs Short-term Loans: Advantages And Disadvantages. Retrieved from