What is Short-Term Personal Loan?
As the name suggests, a short-term loan is a type of loan that is given to an individual for a short tenure that usually ranges from one month to a year. These are advantageous for individuals who are unable to get loans for a longer tenure from a bank or a lender due to various reasons. Short-term loans are generally unsecured, meaning that you do not have to provide any money or property as security for the loan amount. Short-term loans are also known as short-term instalments or short-term finance.
Benefits of Short -Term Personal Loan
1.Flexible End Use
Short-term loans are multi-purpose loans. This means that they can be utilized for organising a wedding, taking a family vacation, renovating your home, paying for education, buying products such as electronics or furniture, establishing and expanding business or paying for a sudden medical emergency.
2.No Collateral Needed
Short-Term Loans are generally unsecured. This means that you do not need to provide any collateral as security in exchange for the loan amount. This is very beneficial for customers who do not have any collateral to pledge as security.
3.Minimal Documentation
The paperwork and documentation that is needed for a short-term loan is very minimal. This makes the entire process fast and easy for the customer as the documentation can be completed very conveniently with ease.
4.Quick Disbursal
Short-term loan disbursals are relatively quicker than most of the other long-term loans as you do not need to provide documentation for the purpose of the loan amount and for any assets as none are pledged generally.
5.Loan Amount
Short-term loans are opted by individuals to meet short-term needs such as paying a medical bill, a wedding expense to meet or an unplanned trip to fund. The loan amount for a short-term loan begins at just Rs.5,000 and can extend up to Rs.3,00,000. The customer can pick the loan amount based on his/her needs.
6.Tenure
Short-term loans as the name suggests are taken for a very short duration. Short-term loans are easier to get approved can be repaid very fast thereby ridding the individual of the financial burden sooner. The tenures range from 1 month to 12 months (1 year).
Drawbacks
1.High Interest
The biggest drawback to using a short term personal loan is this that the interest rates charged are generally flat interest rate which is going to be higher than long term loans. In some cases, the rates can be quite a bit higher or near to double than you are used to. Check the difference between flat and fixed interest rates here.
2.Deeper in Debt
Many times, people take out short tertm personal loans because they are short on cash. They cannot afford all of the bills that they have and as a result, they need to borrow some money. While this will get them by in the short term, many times they will not have any more money later when the loan is due. This can just compound the problem and get them deeper in debt.
FundsTiger can help you getting your short term Personal Loans from the following lenders.
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