What is short-term & long-term? I read that it is investments of short period (less than one year) and long period respectively, but I cannot realize then what means borrowing/lending short-, long-terms.

I was thinking that borrowing short-, long-terms means buying securities while lending is selling.

1 Answer 1


The textbook definition of short-term is less than one year. Long-term is generally considered anything longer than that.

The short-term lending that most consumers might be familiar with would include pay-day and title loans. It could also include lay-away programs or a few months of installments on a purchase. There are also hard-money lenders who offer larger short-term loans analogous to a mortgage but with much shorter duration.

In most cases short-term borrowing is much costlier than long-term borrowing, which is why more people are familiar with the long-term lending options that are widely available.

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