How to Deal with Repayment of Short Term Loans


Short-term loans are the personal loans or business loans which have a shorter-than average duration, usually one year or sometimes even less. This source of finance is necessary for every business to ease everyday operations. It typically necessities a stable flow of working capital. In an ideal situation, the business working capital cycle runs in such a way that the essential funds are accessible, whenever its need arises.

Why these loans are a favored choice of every business?

Short-term loans help the businesses to meet their working capital requirements very easily. These have following advantages and that is why these loans are a favored choice for almost all the businesses.

  • An adequate amount of finance can be availed through short-term options.
  • They are unsecured loans and can be accessible without pledging any business asset
  • The repayment options of such short-term finance are varied and flexible.
  • Businesses have easy accessibility to such type of loans

Among all the other type of benefits, the flexible repayment options are provided by short-term loans hold better attractions for the businesses. They enable businesses to pay off such loan with utmost flexibility that does not put a strain on the regular cash-flow of businesses. So, what exactly are the repayment options?

The repayment options assessable for paying off short-term finance available by businesses:

EMIs -Equated Monthly Installments (EMIs) are the prevalent mode of repayment that is available for paying off the short-term loans. Under this option, the principal amount of the loan together with interest element is included in installment that is payable every month.

Bullet Repayment – Under this repayment option, the interest portion of the loan is overhauled every month. The definite amount of loan which is payable is paid when the tenure is over in one bullet repayment option. Hence, this option is good for the businesses which are in their starting stage and can’t pay the required EMIs.

Invoice-Based Repayment – This is a new short-term loan option and offer finances against the price of the borrower’s invoices. The repayments are then allowed as bullet repayments wherein only the interest is adjusted throughout the loan tenure and on maturity of the tenure, one payment is accepted that is equivalent to the principal amount of the loan.

Tips To Follow For the Repayment of Short-Term Loan

Following are the vital tips ensure that you always meet your short term loan repayment obligations:

  1. Borrow an Amount You Can Bear to Repay Comfortably

This tip applies to a wide range of loans, be it short term loans. You would never borrow more than you can comfortably bear to repay. A general rule of thumb ensures that you do not repay your loan with over 10% of your aggregate net monthly income. This can vary if you have other sources of income, though you must comfortably service your loan alongside your other monthly expenses, because then you can complied to avoid late fees and unnecessary interest charges.

  1. Plan to Repay your Loan in the Shortest Time as Possible to Save On Interest Charges

Short-term loans are very cheap source of short-term cash if you pay them at very quickly. The longer the term will be, higher will be the aggregate cost of the loan. Lower the monthly repayments make the loans very expensive in the long term. You must select the shortest term you can bear. Preferably, you can pay the loan earlier than the planned. However, in such situations, it is essential to look out for timely repayment fees. Some of the short term lenders charge early repayment fees to demoralize borrowers from paying their loans quicker than agreed. Hence, you are allowed to pay off your loan as quick as you prefer without being charged in the event that you choose a trustworthy lender.

  1. Pay on time

If you can’t bear to pay off your loan faster as anticipated, then make the repayments on time. Apart from the interest charges, lenders receive a lot of money on late fees.  To keep you loan reasonable, you can ensure to pay off loan on time. You can place a standing order with your bank to assure that you never miss a payment. A standing order is incredible if you are a careless individual. If you took out a loan you can afford to repay, there is no reason why you should ever miss a payment. Apart from dodging late fees and interest charges, timely payment will certify that you keep your credit profile intact.

  1. Make some way of life changes

You must roll out some way of life improvement, if taking out a short-term loan is financially depleting even when you choose a longer repayment term. You can’t bear to maintain the same lifestyle if you have loan repayment issues from the very beginning. In many cases, you don’t have to make drastic lifestyle changes, but you just need to track your money more intensely ensuring that you spend on the necessities only until you settle your loan.

  1. Keep searching for additional pay

Also, you must look for some additional sources of income to pay off your loan. For example, you can make money from part-time job if you have free time or you can use any windfall gains, like tax refunds, bonus, etc. Hence, paying an extra sum will reduce your interest payment.


For more information about short-term loans visit the website, Global Capital Commercial Home Loans. They are specialists in finding finance solutions to urgent cash problems. Visit the website today for more insights!


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