There are a variety of advantages of medium term loans, but there are also some disadvantages, too. I'll try to outline some of these in more detail below:
Advantages of a medium term loan
- A medium term loan usually means that you'll be borrowing a larger sum of money than you would with a short term loan. If you're starting a business, for example, this is an advantage as you'll know that you have enough money to work with in one lump sum.
- Medium term loans are paid back over a longer period than short term loans, and therefore for the most part, you'll be paying back lower monthly instalments.
- There are a variety of competitive rates of interest on medium term loans, and some of them are fixed, so you could be getting a great rate for a long period of time.
Disadvantages of medium term loan
- Although I highlighted that you'll be paying less back each month, it does mean that you'll pay more interest overall, as you're not clearing your loan as quickly as you would with a short term loan.
- If you're applying for a medium term business loan, you'll often be borrowing less than a longer term loan, which will ensure you have enough money for your project.
There are many things to consider when applying for a loan. The main thing to calculate is the amount you'll need, and whether you can actually afford to pay the monthly instalments.