A short term loan is a loan that is granted quickly in order to deal with a financial emergency and needs to be repaid within a short period of time of a few days or weeks. These loans are generally unsecured in nature.
Types of Short Term Loans
Different types of short term loans are:
1) Personal Loan – These are availed by salaried or self employed persons for any kind of financial need and are generally granted within 48 – 72 hours.
2) Small and Medium Enterprise Loan – This loan is availed by small and medium scale companies. The eligibility criteria and specific details of these loans vary with institution from which the loan is applied for.
Features of Short Term Loans
a) Usually, good credit score is not required
b) Short term loans are also available online through Loan apps like CASHe
c) Minimal paperwork and documentation is required
d) Loans are granted quickly and can be made available even in a span of few minutes through some providers
e) Loans can be secured or unsecured depending on the preferences of lender and borrower
Eligibility Criteria for Applying for Short Term Loans
a) The applicant should have a source of income (either salaried or self employed)
b) The amount of income per month should exceed a pre decided limit varying with different financial institution
c) Age of the applicant should be in a particular range, say 21 – 60 years depending on the financial institution
Documents Required for Short Term Loans
a) Copy of PAN card
b) Aadhar Card / Voter ID, Driver’s License
c) Residential Proof
d) Bank account statement of the last few months
e) Salary slips of the last few months
Advantages of Short Term Loans
a) No worries about the Credit Score
b) Time saving and hassle free process
Disadvantages of Short Term Loans
a) Higher rates of interest in comparison with regular loans
b) Tenure in which the loan has to be repaid is small
In case of an urgent financial need, one should compare and analyse all the different options available for borrowing money on the basis of interest rate, ease of availability, time period in which it needs to be repaid, etc. Each option comes with a different set of pros and cons and one should choose that option which suits his/ her needs in the best possible way.