Talking about finances, we often deal with debt. Although it is seen as negative and is often avoided, actually debt also has a positive impact and benefits for us, especially short-term debt. Short-term debt is a loan with a maximum repayment tenor of 1 year.
But, it's the same as long-term debt, if this short-term debt is not managed properly, in the end it will make us experience financial difficulties. Especially if we are employees, who rely more on salaries.
Actually, status as an employee has its own advantages, too, when viewed from the side of its ability to owe. The employee has a steady income, so it shouldn't be a problem to get into debt and pay it back.
But, the fact is not so. Being an employee is indeed more profitable on the one hand, but on the other hand, there are struggles. But hey, that's what we live for right? So, it's fun! So, in this article, let's learn more about short-term debt, especially those that employees should be able to take advantage of.
Getting to Know More about Short-Term Debt
In accounting, short-term debt is the obligation of a party to pay off financing using current assets sources with personal wealth, for example with employee salaries or other income owned. Short-term debt will be easier to settle if the source of assets is greater than the amount of the loan.
Well, if you are in the opposite condition, then for sure, you will experience obstacles in the form of arrears, fines, and others. Short-term debt is not forbidden to take.
However, financial health must be maintained properly, as well as its management must be done properly. For example, sometimes we really need practical things, so it's okay for shopping, you swipe your credit card. However, before maturity, pay off immediately so that it doesn't burden you with interest or fines.
Thus, your life is more practical, and your credit score is also well maintained. So, in principle, debt is okay, but you have to make sure that there are funds to pay it back. Short-term debt payments must be repaid immediately and become a priority for routine financing according to maturity.
Currently, short-term loans can be found easily along with the emergence of online loans. Well, this is what is now sometimes destroying us.
Advantages of Short-Term Debt Even though it is considered negative, debt is not without benefits. In fact, debt can also help us at certain times. This type of loan has benefits, especially for those of you who are in an emergency. The reason is, it often happens too, when we are in need of money quickly, but the assets cannot be disbursed immediately.
For example, if you have gold, you have to sell it first. Or if it's a deposit or mutual fund, it must be disbursed first and it takes time. Well, if it's like this, short-term debt can be a solution option.
Easy Requirements
Fund loans with short tenors generally only require simpler and easier document requirements, especially if you choose an unsecured loan. Online loan companies or fintech even free users for any purposes as long as it is not an illegal act or crime. Not a few fintechs that only provide loans with KTP capital.
Short Tenor
The attractiveness of short-term debt is the fast repayment time with a duration of 3, 6 to 12 months for loans without non-bank collateral, or through fintech. Short repayment times can make it easier for you to manage financial cash flow and create a feeling of security because there are no long-term burdens. The reason is, the longer the tenor, the greater the amount of money that must be set aside.
Fast Defrost
Another advantage of short-term loans is the fast disbursement time usually between 1-3 days of the application period. In fact, some fintechs can disburse funds in just minutes or hours, only with an ID card and a photo of yourself for submission.
Limited quantity and time
Borrowing with large funds is certainly not recommended, especially if your income is still minimal. So, make sure you only borrow when you really need it, borrow as needed, and make sure there are funds that can be used to pay it back. A large loan amount leads to a large amount of interest to be paid.
With short-term debt, there will be limits. Indirectly, this can help you from wanting to owe even more. You can focus on the amount needed for a short time, so it doesn't burden your financial planning. Seeing some of the advantages above, it's no wonder that short-term loan services are in demand. Especially for needs that have not been met with current employee salaries, which are sometimes considered mediocre.
3 Types of Short-Term Debt Commonly Used by Employees
Short-term debt is an easy alternative solution in times of emergency. Well, for employees generally there are several examples of short-term debt that can be utilized, but with a note; must be accompanied by good management.
Paylater
Paylater is a method that is currently being adapted by many digital applications or platforms. It is useful for delaying and installment payments when you want to buy something. Digital companies and start-ups are the ones who offer the most Paylater services to their users.
The general concept is more or less the same as a credit card, but its use is made simpler and more practical. No wonder, if many people do not hesitate to activate this short-term loan feature. You can also use it, but remember! Make sure you use Paylater for urgent needs, and make sure you can afford it.
Credit card
Most people must already know this type of short debt. Credit cards can be used to settle payments from transactions for any purpose. As an employee, you can also really take advantage of this credit card service. For example, if you travel, instead of carrying around too much cash which is not safe and convenient, you should just use a credit card. Well, but again, make sure everything is according to your budget and needs, so you can pay it on time.
Cooperative debt
As a non-bank financial institution, savings and loan cooperatives are one type of business created to improve the community's economy, especially for its members. When you are in a critical situation, as a member of a cooperative you are lucky because this business activity can provide loans to its members.
Currently, many savings and loan cooperatives offer services with sharia contracts, so you don't have to worry about usury. In addition, the OJK has also released cooperatives that issue online loan applications.
However, this loan is only valid for cooperative members and is not allowed for anyone outside this institution. The requirements for applying for a loan are quite simple, such as an ID card, family card, salary slip, PBB payment, and electricity costs.
Well, usually large companies also have cooperatives for employees. The intention is—in general—to help improve employee well-being. So, it's okay if you want to take advantage of this facility.
Again, make sure you can pay it back. Being an employee does not fully guarantee the necessities of life are met. Especially if you are the sandwich generation who bear the costs of your own parents and family at home.
Short-term debt is an alternative option that can be used to cover needs in critical times. However, make sure your income is able to pay off the debt on time.
