Our monthly salary and savings are not enough to bear all expenses. We can only fulfill our basic needs with our fixed salary and savings. But you can apply for a flexi loan online to meet your other additional needs. Moreover, if you need a loan urgently, you can get a term loan as per your ability to pay it back.
There are different types of term loans that banks offer to borrowers. You can apply for a term loan using a business loans online app. What is a term loan? Term loans are a fixed amount of money given for a fixed duration and paid back with the specified interest and periodic installments. Following are some of the essential features of a term loan, which can help you to understand more about the term loans;
- Term loans are secured loans.
- Periodic interest payments and repayment of the money loan amount are obligatory for the borrower.
- The banks provide term loans to the borrowers at a fixed rate, which can negotiate at the time of the dispersion of fast loan.
- The maturity period of a term loan lies between five to ten years.
- Convert term loans into equity per the banks’ or financial institutions’ terms and conditions.
- There can be restrictive covenants that the lender, i.e., banks and financial institutions, imposes on themselves.
So, these are the best features of term loans.
What are the different types of term loans a bank or financial institution provides? There are three different types of term loans that you should know about, which are as follows;
Short-term loans –
Short-term loans are single-purpose loans. The maturity period of these loans can be one year or up to eighteen months. It is a loan you can apply for to get support to fulfill the temporary financial requirements. For example, you can apply for short-term loans if you are facing losses in the business to cover the losses and make good profits by investing the required money to control the circumstances. And as per the conditions, you need to repay the loan with the specified interest before the due date. Some of the best short-term money loans that you can apply for online are personal loans, bridge loans, payday loans, demand loans, etc.
Intermediate-term loans –
Intermediate-term loans are also known as mid-term loans. It may take up to five years for these loans to repay. After that, you can repay the principal amount of the loan by generating profit from the loan amount and or from other sources. For example, you can apply for a mid-term loan for purchasing machinery or boosting working capital for the business, and you can pay back your loan if you earn desired profits or use other sources.
Long-term loans –
Banks or financial institutions provide a long-term loan with an extended tenor. These loans are in nature for both the lenders and the borrowers. For example, lenders, i.e., banks or financial institutions, have fewer risks due to their mortgage collateral and borrowers have the EMI options to repay the loan over a long period.