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About Instant Short-Term Loans
Short-term loans, also known as short-term finance, are loans taken for short durations, usually less than a year. They are obtained from banks or private finance companies. The interest on these loans is paid on the principal advance amount.
About Instant Short-Term Loans
Features of the short-term finance
Individuals and businesses are eligible to apply for short-term loans. While some companies may look at your credit score, it is possible to obtain loans even with a poor credit history.Short-term loans can be approved within a day, after filling the required form online. Banks that offer short-term loans usually have a repayment period of 60 to 120 days. However, you should make sure you approach a reliable company to obtain the loan.
Types of Short-Term Loans in India
There are different types of loans available for a short period. Some of these include -
- Personal Loans :
- SME Short-Term Loans :
These are loans extended to companies to meet immediate requirements. Different banks have different criteria for availing these loans. You can check with the respective banks for details.
- Bridge Loans :
These loans are taken to help you out till you get another loan. Usually used in property transactions, they can be taken by companies that are awaiting their funding to come through or awaiting future returns.
- Demand Loans :
These loans, meant to meet urgent financial needs, can be availed at banks or NBFCs. The maturity value of savings with the respective institution will determine how much can be borrowed. Banks accept insurance policies and NSCs as collateral and the loan amount may be anywhere from 70% to 90% of the maturity value of the instruments provided as security.
You can take a personal loan of up to Rs. 30 lakhs. Salaried and self-employed individuals can avail these loans although they come at a higher interest rate. Personal loans are issued within 2-3 days and can be paid back within 6 months to 5 years, based on your requirements.
Eligibility Criteria for Short-Term Loans
Depending on the type of loan you are looking to avail, the eligibility criteria would differ. However, some of the general rules are:
- For individuals
- Can be availed only by salaried or self-employed people who are earning a certain monthly income.
- All applicants must be above 21 years of age.
- Required documents need to be provided for approval of the loan
- For companies
- The company should be earning a profit consistently at least for the past 2 years.
- A certain annual revenue may be expected
- The bank may only provide loans for businesses that have been operating for a certain number of years.
Documents Required for Short-Term Loans
To avail of short-term loans, you need to have a PAN card, some proof of income, proof of residence, proof of age, identity, employment proof along with your bank statements of the last 6 months. Banks and NBFCs may request some other documents not listed here.Benefits of taking short-term loans
- Reduced interest
- Foreseeability
- Meets instant needs
- Improves credit score
- Easy to obtain
Since short-term loans are repaid sooner, the rate of interest is lower than your regular loans. The rate of interest increases based on the duration of the loan. Thus, by applying for a short-term loan, you save in the long run.
Due to the shorter duration, there is less of a hassle in paying back the loan. A loan taken for a longer duration would carry with it the uncertainty of whether you would be able to pay the EMI for so many years. Thus, budgeting and forecasting your financial status and capability is easier with a short-term loan
Not only can you skip the long queues and extensive paperwork that you would encounter at banks, but you can also get your loan sanctioned in a day or two without any hassles.
Applying for short-term loans that are easy to clear will give you the opportunity to improve your credit score, without too much trouble.
Most lenders do not bother too much about collateral or even credit score. Sometimes, all it takes is the required documentation and if everything meets their standards, your loan is approved.
Interest rates and charges for Short-Term Loans
The interest rates for short-term loans depend on the type of loan and the institution you approach. Interest rates for these loans can be higher since borrowers avail these loans for short durations. The rate of interest on short-term loans ranges between 12% to 27% per annum.
How to apply for a short-term loan
Applying for these loans may vary however, the general steps include visiting the website or office of the institution and filling the application form. Submission of the specified documents will be the next step. Once this is done, if everything is proper, your loan will be approved.
Short-Term Loans FAQs
1. Can short-term loans be taken with a low credit rating?
The lender decides whether the credit score matters or not. However, most lenders have no issues with low credit ratings for short-term loans.
2. Will I need to make arrangements for a guarantor to get my short-term loan approved?
Some lenders may ask for a guarantor; however, you can certainly find institutions that do not need this requirement.
3. Do I need to furnish collateral or security for my short-term loan application?
Short-term loans are known to be unsecured loans, so mostly, lenders will not stress on security or collateral.
4. How long can I take to repay a short-term loan?
This would depend on the duration of the loan; however, short-term loans are usually paid off within one year.
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