Need cash now? A short-term loan might be the way to go.
There are several benefits to taking out a short-term loan from a private lending company versus heading to the bank, says Shameer Dada, President of C.A.I. Financial in Port Moody.
One major difference is the impact on your credit rating.
“Every time you apply for a bank loan, there is an inquiry into your credit score,” he says.
And each inquiry is a hit to your credit rating.
Short-term loan companies, like C.A.I. Financial, do not require a credit check so applying won’t negatively affect your credit rating.
Other benefits of short-term loans include:
• Approval is instant and the funds are typically available the same day
• With a reciprocal loan, using collateral, like a vehicle, boat, RV or ATV, doesn’t require the lender to take over the title, so you can continue using your collateral over the course of the program
• Not a lot of paper work is required; often, the application process can be started online or over the phone
• While the interest rates are higher, payback periods are flexible and typically there are no penalties for early payouts
• In most cases, with proper collateral, approval is guaranteed
Bank loans, by comparison:
• Typically have minimum credit requirements and each application includes a credit check
• More stringent lending criteria means you might not qualify for as much cash as you need
• Have a set payback period, usually over a longer period of time, with penalties for paying out early
• Loan approval and then getting the funds can often take several days