Discount loans are useful and appropriate for short-term financing and can be applied toward essentially any financial need. In a discount loan, financing charges and interest payments are removed from the original value of the loan, and borrowers receive the remaining amount. Although the borrower may gain quick access to the cash, the total value of the loan, including interest and finance charges, must be repaid to the lender. To obtain a discount loan, you must identify financing institutions that provide this type of financing and apply.
If you are in need of short-term financing for some unexpected expense, a discount loan may be appropriate for you. Loans that you expect can be repaid in a month or so may be best served with payday loans, which are offered by payday lenders who extend financing ahead of an employee's pay cycle. Discount loans may be used for essentially any purpose, and this type of financing is often extended through Internet financing companies.
Getting a loan, any loan, requires qualifying for the financing. Certain discount loan providers who advertise online suggest that an especially high credit score is not always necessary to qualify. There is, however, a chance that a cosigner to the loan may be needed. Higher credit scores will command lower interest rates to be applied to the face value of the discount loan, but expect that rates will be higher than what is common in more traditional, longer-term loans.
You should be able to prove some type of income or source of revenue in order to qualify for a discount loan. Paying current creditors in a timely manner will also support the application process. Proof of employment may be necessary so that the lender is exposed to less risk surrounding the chances for a default. A benefit for the borrower is the repayment schedule, and a monthly amount becomes apparent given that the interest payments and financing charges are removed before financial statements begin.
Certain demographics may be eligible for discounts on traditional loans. Students, for example, can qualify for a lower interest rate on a college loan by agreeing to and establishing an automatic payment schedule with a lender. Although this is a variation on a discount loan, it results in a cost benefit for the borrower. Major banks and smaller financial institutions both with brick-and-mortar locations and online establishments are likely to offer these loan savings.