What are Short Term Loans? – Key Features and Benefits
Short Term Loan
A short term loan provides urgent assistance for an individual’s financial requirements. As its name suggests, a short term loan would typically have a short tenure ranging from a few months to five years.
A short term personal loan is mostly unsecured too, meaning you will not be required to pledge any collateral to get the loan. A wide range of lenders, from banks to NBFCs, offer short term loans online, often involving minimal documentation, competitive interest rates and quick disbursals. These online short term loans, therefore, are usually a good option to meet emergency funding requirements of eligible borrowers.
Read on as we discuss short term loans in detail, including its features, benefits, eligibility criteria and document requirements.
Short Term Personal Loan Details
| Loan Amount | Up to ₹20 Lakh |
| Interest Rate | 9.9% to 45% p.a |
| Foreclosure Fee | Nil |
| Tenure | Up to 72 months |
How to Apply for an Online Short Term Loan?
You need to follow these steps to apply for short term loan from a financial institution:
- Login to your lender’s website or download the mobile application.
- Provide the basic details like name, address, PAN, Aadhaar, etc. as per requirement.
- Check loan eligibility.
- Fill in your desired loan amount (within the eligible limit) and tenure.
- Complete KYC verification
- Click on ‘Apply’ after reading the terms and conditions
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Features and Benefits of a Short Term Loan
- Short term loans do not require you to pledge collateral in order to get them
- The documentation requirement could be low for a short term personal loan
- Applicants could enjoy instant disbursal of funds through short term loans like Navi Cash Loan making them a perfect fit during a financial emergency
- Many online short term loans come with flexible payment options where you can set up your own repayment plan. In long-term loans, you usually have a fixed repayment plan.
- Despite being unsecured in nature, short term loans could come with attractive interest rates. For example, Navi Cash Loan interest rates begin at only 9.9% p.a. for eligible applicants
- Short term personal loans come with no restrictions over end usage – the loan funds could be used for any purpose as per the borrower’s requirement
- You can avail of an instant short term loan, and pay it back in full on time to improve your credit score
Documents Required for Short Term Loans
- Proof of identification
- Proof of age
- PAN
- Address proof (Driver’s license/Voter’s ID/Passport/Electricity bill or Phone)
- Income proof
There might be some additional document requirements depending on the terms and conditions of your chosen lender. Do get complete clarity about the documents and eligibility before applying for an instant short term loan.
Eligibility Criteria for Short term Loans
- Nationality: Indian Resident
- Age: 21 years to 65 years
- Annual Household Income: ₹3 lakh
- Type of Employment: Salaried or Self-employed
- Cibil score: 650+
*Actual eligibility criteria could vary as per lender
Final Word
An online short term personal loan with minimal documentation, paperless process and fast disbursal could be an excellent way to raise money, especially during a financial emergency. Bear in mind, applicants with a steady income and a good credit score usually get the lowest short term personal loan interest rates. However, ensure you take such a cash loan only if you have a pressing requirement, and repay it in full on time. A personal Loan would help you avoid steep interest penalties and a credit score drop that could adversely impact your future loan applications.
FAQs
A short term loan is essentially an unsecured loan that could be used for a wide range of requirements. They could be categorised as personal loans, instant cash loans, line of credit, marriage loans, travel loans. etc. with or without similar terms and conditions.
Once an individual applies for a short term loan, the lender would quickly evaluate his/her eligibility by checking KYC details, income, and credit score. If satisfied, the lender would present a customised loan offer based on the eligibility, which, if approved, would be quickly transferred to the applicant’s bank account. The process could vary as per lender, but would be even faster for pre-approved applicants.
Short term loans carry high risks for a borrower who is unable to balance its short repayment period and high-interest rate. Therefore, borrowers must consider this associated risk before opting for short term loans.
Lenders charge penal charges and late payments for missing a repayment or paying after the due date. They also charge processing fees for short term loans.
No, short term loans usually do not affect an individual’s credit score. However, missing an EMI date or defaulting on a short term loan can disturb their credit score.
The tenure for a short term loan can vary from one bank to another. A short term loan’s tenure usually ranges from 1 month to 1 year.
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