A short term personal loan is unplan and taken during emergencies, true to its name and usually has a shorter loan tenure of not more than one year.
These types of loans are advantageous to you when you want to overcome any financial situation for a lower sum of money for a shorter duration. Banks and many NBFCs offer short term personal loans at a comfortable rate of interest.
This type of loan is meant only to meet one’s personal needs and not for any commercial purposes.
The loan amount can vary between Rs.50,000 to Rs.25 lakh.
If personal loan repayment is on time of the short term loan, then it has a major impression on one’s credit score. However, in case the repayment is not made on time. Then it will encumber your credit score. This hindrance may prevent you from availing of loans in future easily.
Benefits of Short Term Personal Loan
There are several Benefits of Short Term Personal Loan, they are:
Lesser Interest Cost
Lenders charge a higher interest rate for Short Term Personal Loan, Nevertheless, you will pay lesser interest than that of long term loans as it entails a shorter duration therefore your interest outflow is less.
Short Term Personal Loan is process and made available within 48 to 72 hours.
Applications are processed fast compare to long term loans as Short Term Personal loans attract a higher rate of interest and bear less risk. Lenders are keen to lend money under this category.
Helps Improving Credit Score
As we know, a good credit score helps one get a loan at a lower interest rate. If you carry a bad credit score, you will get a loan at higher interest. People having bad credit scores like to take a loan for a few months with a special target of improving credit score very quickly i.e. in a short period.
If you avail of a short term personal loan and repay it in a timely, your credit score will improve dramatically which will enable you in taking a new loan at a lower interest rate.
Can be Repaid Conveniently
As Short Term Personal Loan is applied for a comparatively lower amount than that of a long term personal loan, it can be repaid much more easily and comfortably.
Short Term Personal loans can be used for a variety of purposes
A short Loan is avail for any purpose; you need not unveil the motive of availing the loan to the lender. The loan can be utilized for paying your credit card bill, purchases of any item for personal use, going on a holiday, for medical assistance, for weddings, house repairs, home refurbishing, etc.
Best Suited for those who do not want a Debt Burden for Many Years
Short Term Personal Loan is suitable mainly for those who do not want to carry a debt burden for the long term but are presently going through a financial crisis and want some financial assistance.
- No Requirement of Collateral
- No collateral or security is require to avail short term loan as it is an unsecured loan.
- The eligibility criteria for availing the short term personal loan are:
- You must be an Indian citizen and residing in India.
- One should have at least one year of professional experience and have employed for a minimum of 6 months.
- Must be a salaried employee with an MNC or a public/private company
- Your age must be between 21 to 67 years.
Documents required for personal loan
When applying for a personal loan, you must furnish identity and address proofs such as:
- Duly filled out a personal loan application form
- A recent photograph
- Proof of identity, such as passport, Aadhar, Voter’s ID, driver’s license etc.
- Proof of address, like electricity bill, telephone bill etc.
- Age proof
- Salary slips of the last 3 months
- Bank statement of the last 6 months
- A cheque for the processing fee.
- Latest IT return documents
A short-term loan has very little risk as the amount sanction is limit and the tenure is short. Today the loan application has turned digital; it is easier to apply for speedy short-term loans online.