A short term loan is a type of loan that is taken to meet an urgent personal or business financial need. The borrowed amount has to be returned with interest within the repayment tenure, which is generally within a year of getting the loan.
How a Short Term Personal Loan Works
- You agree to borrow an amount that you can afford from your chosen lender.
- Interest and other loan terms are applied to the amount you intend to borrow.
- You agree to repay the loan and the interest applied in full on a date that’s pre-decided by you and the lender.
- The lender carries out a credit check to assess your financial history before approving the loan.
- If your application is successful, you get the money.
- You start repaying the loan on the agreed date until the loan is repaid in full.
Eligibility Criteria for Short Term Loans
The eligibility criteria vary from lender to lender. The below mentioned is the general eligibility criteria for short term loans:
- An Indian resident
- Salaried or self-employed individual/business owner
- Above 18 years of age
- An income of over ₹ 15,000
- If salaried, work experience should be of at least 2 years and if a business owner, the business has to be at least above 1 year old
How to Apply for Short Term Loans Online?
Below are the steps you need to follow to apply for a short term personal loan online in India:
- Compare Loan Offers: As a rule of thumb, compare various loan offers before you apply for a loan with a particular lender. Check the loan amount offered, the interest rate charged, the processing fees and late payment fees applicable, and then make an informed decision.
- Check Your Loan Eligibility: Once you choose the lender, check the lender’s eligibility criteria for a short term loan. Ensure that you meet the loan eligibility criteria and then go ahead with the loan application process.
- Fill the Online Application Form: Enter the key details, such as your personal details, the loan amount you wish to borrow, the loan duration, etc. in the application form and submit it along with the required documents.
- Check the Loan Status: Upon receiving the application, the lender will scrutinize your application and the status, whether approved or rejected, will be intimated to almost immediately.
- Receive Funds: If your loan application is approved, you will receive the approved funds.
What Are Short-Term Personal Loan Interest Rates?
The interest rate varies from lender to lender. The interest rate generally starts at 10.99%. Lenders take into account your creditworthiness while deciding the best interest rate for you. So, it’s important that you do your research and compare the various short term personal loan offers to find the best interest rate you can qualify for rather than accepting the first loan offer that comes your way.
Benefits of Short Term Personal Loans
- Quick Approval and Fast Disbursement
When faced with an emergency, your need for money is urgent. If the loan sanctioning process takes a long time, it won’t serve its purpose. A short term loan is sanctioned quickly and with minimal documentation.
Short term personal loans are collateral-free. That means you get the loan by providing a guarantor or collateral.
- Competitive Interest Rate
The personal loan market is highly competitive. Hence the interest rates offered to attract consumers are reasonable. And since the short term loan is for a short tenure, the interest outgo is not very high.
- Loan Approval for a Wide Range of Amount
The loan amount depends on various factors like your repayment ability, your credit score, your income, etc. If these factors define you as a good borrower, you may get approved for the amount you need or even larger.
- No Long-Term Commitment
With a short term personal loan, you are spared of a long-term commitment. You get the money you need, and pay it back within a year and move on with your life
Since the Fintech revolution, there are some lenders in the personal loan lending space, who are willing to work with you to design a short term personal loan that is best suited for your specific needs. Additionally, you can use this short term loan for any purpose. No questions asked.
- Shorter Time for Incurring Interest
As most short term loans are required to be paid off within a year, your interest expense is lower than what you would pay in a traditional personal loan.
If you want a quick short term personal loan to address an urgent financial commitment, apply for MoneyTap’s small personal loan. Get MoneyTap for a quick access to money at a low interest rate, and flexible repayment options. Get it now!