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What is The Difference? Short Term and Long Term Loans.

A loan is divided into two main categories that are further divided into different types of loans people opt for.

We all keep hearing about short term and long term loans that help people combat their financial crisis and lead a better life.

A borrower ask for a loan for various purposes. He or she has to return the amount within a said period of time. A loan has to be paid with interest.

These loans have distinct aspects that make them different from each other.


  1. The time period for short term loans is up to 3 years. These loans include payday loans and flexible loans.
  2. Payday loans are borrowed by a person when there is an emergency such as car breakdown.
  3. It can also be borrowed when you are taking a vacation or stumble across unexpected bills.
  4. The amount to be returned is taken from your bank account on your next pay date.
  5. Payday loans are up to 2000$


Flexible loan is a credit based loan that is up to $ 25,000. The term for this loan is 12 months. This loan comes with a higher interest rate than long-term loans.


As the name suggests, long-term loan extends to a longer time period. The time frame to repay the amount depends on the lender, type of loan and your intended use of the amount.

It includes mortgages, student loans, start-up loans and wedding loans.

It is credit based and can be given in the form of secured or unsecured loan.

A secured loan requires asset that can be kept as a collateral whereas an unsecured loan does not require a valuable asset and therefore has a high interest rate.