In Search of Instant Money? Short Term Personal Loan May Help You
Owning and possessing your favorite gadget, which you desired the most has some special feeling to cherish and remember. With day-to-day rapid advancements in the field of science and technology, we come across various exclusive and high-tech products which we just cannot afford to lose, so we plan to buy them at the earliest. Many of us want to purchase items from a range of high-end products, including laptops, gaming consoles, smart televisions, cameras, smart phones, home theaters, etc.
Many of us develop an intense urge to fulfil their desire by purchasing that product, even when the required amount or cash flow is insufficient. However, to accomplish all your financial requirement, like to buy your desired product could be attained by simply availing short-term loan. As its name suggests, short-term loan is set to be paid back in a short period of time.
What is a Short-Term Loan?
A short-term loan is an unsecured loan which individuals and businesses can borrow from several commercial banks or financial institutions for a maximum period of up to 12 months. They are commonly used to meet short term financial needs of the borrower wherein the interest rates are generally higher as compared to long term loans. Short term loans are beneficial for borrowers who are not able to or not willing to avail personal loans with longer duration.
For some people who have not availed any type of credit until now, the credit history remains NIL, which causes hindrance in loan approval. Therefore, alternate data is used to determine his/her creditworthiness via few social media apps that include Facebook, LinkedIn, Twitter, etc. This social scoring is a psychometric analysis which determines a person’s creditworthiness through his/her digital markings.
The main benefit that these social media apps have over banks and financial institutions is their quick and easy disbursal of loan amount. Generally, a personal loan from a bank would take at least 3-5 working days to get approved and disbursed. On the other hand, short-term loan gets approved instantly. Many of these social media apps do not require much paperwork. Close to 90% of the lending process happens through their mobile application. The rest of the 10% paperwork basically includes physical signature or post-dated cheques of the applicant.
The short-term loan ranges between Rs 5,000 to a maximum of Rs 1,00,000. Several lenders offer interest rate that ranges between 12% to 22%. Short term loan can be availed for maximum tenure of 12 months, as well as can be taken for minimum of 15 days. Generally, people find these types of loans to be less impacting in terms of interest burden.
Do not confuse Short-Term Loan with Payday Loan, as Payday Loan is very similar to short term loan but only operational in the US and UK. In India, the only term used and availed is short-term loan. Nowadays, with the emergence of some app-based lending companies like CASHe, which are registered as Non-Banking Financial Corporations (NBFCs) availing short term personal loans has become easier. Thus, other small financing companies are also expected to follow the same.
As of now, there are no regulatory requirements for these online lending portals. Also, our government is increasingly looking forward to digitize India, therefore they highly appreciate these online companies to rapidly innovate even in the financial space.
Let’s discuss some of the features of Short Term Loan:
- Shorter Tenure
- Suitable for Individuals and Businesses
- Simplified Documentation Process
- Quick Approval and Disbursal
- Being an Unsecured Loan – No Collateral needed
- Lesser Credit Score can be accepted
- Easy to Apply and Qualify – Online
- No Guarantor Required – Varies from lender to lender
Even if your purpose relates to car maintenance, home renovation, unexpected bill payments, or buying products, etc., taking a short term loan is a viable option. However, the interest rates levied by lender on these loans are on a higher side as compared to personal loans. In some scenarios, few lenders that offer loan if credit history is not good may charge high interest rate to cover their risk.
The eligibility criterion to apply for short term loans is as follows:
- Age between 21-60 years
- Salaried or Self Employed
- Your business should have a minimum tenure of three years
- Income Tax filing returns for last one year, if you are self-employed
What are the Key Benefits?
a) Faster Application Processing
Being the maximum time duration of one year, the amount that can be borrowed would be much lesser than the amount in a personal loan. Therefore, the application process is not lengthy and much quicker. After you apply for short-term loan, within 24 hours you will get to know the status of your application, whether it has been accepted or rejected.
b) Quick Access to Loan Amount
In relation to the above, with short-term credit, the application process and release of funds takes quicker than its long-term counterpart. Funding is released immediately, so you can use the cash to pay for emergency expenses, be it paying suppliers or your employees.
c) Less Restrictions
Not only is the approval time faster, but with short-term loan, the documents you need to submit would be much less as compared to long-term personal loan. This is because you are not borrowing a large amount which equates to less risk for the lender.
d) Lesser Paperwork
Short term loan requires minimum documents with respect to the loan application, as the requested loan amount is not large, as well as the repayment time is also within a year. Easy and quick processing is the added advantage of getting this type of loan.
Sometimes, lenders might not even check for your credit history or credit score. Moreover, you should check thoroughly the relevant details before applying, such as high interest rates, pre-closure charges, if any and processing fees levied by lenders. You should also be careful while borrowing from unknown or unfamiliar private lenders, as you may be subject to fraud. Before applying for any short term loan you may also get in touch with our team of professional customer care executives, as they might offer a better insight related to your financial requirements.