What are Short-Term Personal Loans?

What are Short-Term Personal Loans?

Like most loans, the specific nature of short-term loans varies from one financial institution to another and also differs from the banking system of one country to another. However, a few general characteristics of short-term loans are as follows:

 
What are Short-Term Personal Loans?

What is a Short-term Personal Loan?

In the financial lending system, a short-term loan is a kind of loan which is provided by a banking or non-banking financial institution for a short tenure or duration. The short-term loan period is usually less than a year. These loans are usually unsecured in nature, which means that no financial asset needs to be guaranteed as collateral against the loan. However, in special cases, banks may require applicants for a short-term loan to secure it against collateral. A short-term loan is also referred to as a payday loan.

What are the Characteristics of a Short-Term Loan

Like most loans, the specific nature of short-term loans varies from one financial institution to another and also differs from the banking system of one country to another. However, a few general characteristics of short-term loans are as follows:

  • A short-term or payday loan can be sought by both individuals and businesses.
  • Applications for short-term loans can be submitted online to financial institutions, involving as little paperwork as possible.
  • An application for a short-term or payday loan can be granted or approved in as little time as a day. This, however, is contingent on the policies of individual financial institutions.
  • A short-term loan may be secured or unsecured against collateral, depending on the lender of the loan.
  • Even though most loans are granted to only those individuals with a good credit history, exceptions are made in the case of payday loans to be provided to people with bad credit histories.

Are Short-term Loans Available in India?

In India, short-term loans are available and are provided by most lending institutions. They are commonly used for personal finance and for financing business needs for companies. The type of short-term loan picked by individuals decides the interest rates that are applicable to their loans. The various types of short-term loans that can be availed in India are as follows:

  • Short-term Personal Loans
  • SME Short-term Loans
  • Short-term Bridge Loans
  • Demand Loans

You can apply for a short term personal loan by MoneyTap here: www.moneytap.com/personal-loan.html

Short-term Personal Loans in India

Short-term personal loans in India can be applied by both self-employed and salaried individuals and can have a maximum principal amount of Rupees 30 lakhs. This, however, depends on which financial institution an individual approach, and what amount that institution is comfortable lending for a short period. These loans usually have interest rates higher than other types of loans. Nevertheless, the major advantages that work in favour of opting for a short-term personal loan are that the application process for such a loan requires minimum documentation, and there are no restrictions as to what purpose such a loan will be used for. Another advantage is that the applications for short-term personal loans are usually processed in a short period of 48 hours to 72 hours.

What is the Eligibility for a Short-term Personal Loan

The eligibility criteria for a short-term personal loan is not universal for all banking and non-banking financial institutions. However, a few common eligibility criteria for such a loan are as follows:

  • The applicant for a short-term personal loan needs to be salaried or self-employed.
  • The applicant for such a loan should be able to provide all supporting documents needed for his or her application. Supporting documents for a short-term personal loan differ from one lending institution to another.
  • An applicant needs to have a steady monthly income which falls above the minimum level set by each financial institution.
  • An applicant must be at least 21 years old, and not more than 60 years old.

Depending on the reason behind why you’re applying for a personal loan, you can also look at the option of taking a personal line of credit instead of a personal loan. MoneyTap offers a personal line of credit which works the same way as a personal loan, but it gives you the advantage of being able to borrow in parts. This means that even though you can use the entire approved limit, if you borrow the amount in parts, you only need to pay interest on the part of the money borrowed.

Download the MoneyTap loan app to apply online without any paperwork and get approved in just 4-minutes.

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