The tenure for short term loans generally ranges from about a month to a year. They are usually unsecured, which is a plus point. This means that you don’t have to pawn any property as a security to avail them. This is beneficial for people who are not able to get a loan from financial institutions for a longer tenure for several reasons. You can download the Navi App to avail of short term loans quickly and easily.
A short-term loan provides temporary support for an individual’s urgent financial need. As its name suggests, short-term loans have a small tenure, and borrowers must repay them within a given period. The maximum repayment period for short-term loans is usually five years.
Moreover, short-term loans are mostly unsecured, meaning one does not need to pay collateral to get funds. Therefore, it is also easier to get short-term loans than conventional loans to meet small financial requirements.
You can procure a personal loan to meet personal needs such as travel, renovation of your home, education needs, and so on. Personal loans are often extended based on your income, credit score, and ability to repay. Many personal loans don’t require any collateral.
Banks and NBFCs provide this facility to customers with balances lower than they intend to withdraw. However, banks will charge high-interest rates for this extra amount.
Customers must be careful while exercising this facility, as some banks may charge extra interest from customers.
Demand loans can be procured to meet urgent financial needs. You can pledge your life insurance policy or other financial instruments in order to procure it.
These are small unsecured loans with which individuals can borrow trivial cash from Rs. 10,000 to Rs. 2 lakh. One can fulfil requirements like medical expenses, travel, and home renovation with instant cash loans.
This is a type of loan under which banks or NBFCs set a revolving credit amount for borrowers. Individuals can either borrow any amount within this limit as instalments or as a lump sum. Banks determine this credit limit on the basis of borrowers’ creditworthiness.
Furthermore, banks will charge only the borrower’s withdrawal amount and not the remaining amount. Also, borrowers cannot withdraw until they repay their dues. After full repayment, borrowers can resume borrowing.
These loans help borrowers meet their monetary requirements at month’s end when they need more balance. An individual’s salary determines their loan amount for payday loans. As its name suggests, the borrower must repay this as soon as they receive their salary for the next month. Payday loans are known to carry very high-interest rates.
Unlike conventional loans, short-term loans carry a small repayment period, say one year or less. Also, the approval of these loans depends primarily on a borrower’s creditworthiness. The following points describe how these loans work:
To sanction a short term loan, the following documents are required:
There might be some additional documents required in rare cases. It is advisable that you check the document requirements thoroughly before applying.
You need to follow these steps to apply for short-term loan from a financial institution:
Here are the advantages of short-term loans:
Borrowers do not need to opt for traditional loans when they require immediate cash. Short-term loans make it very easy to get small loans.
For short-term loans, borrowers do not require any collateral as these are typically unsecured loans.
Unlike the traditional loan application process, lenders instantly approve short-term loans after verifying the essential documents.
Owing to their short repayment span, these loans are considered less risky for lenders than traditional loans.
As short-term loans have a minimum repayment period, the borrower does not need a very high amount on interest payments. This is especially true if he/she repays the loan in a very short time.
Besides the above advantages, short-term loans also carry the following disadvantages:
This type of loan comes with a minimal amount. These are only meant to fulfil urgent needs.
Owing to their short tenure and loan to meet urgent requirements, short-term loans have high-interest needs. Meeting them can be a hard nut to crack for borrowers with mediocre pay.
CIBIL scores reflect the creditworthiness of borrowers. Therefore, mainstream banks and financial institutions often reject applications with low CIBIL scores. This makes it challenging for a population with poor CIBIL to borrow money urgently.
With this information, you’re all set to apply for a loan through Navi. It also offers you an internal loan calculator that allows you to accurately determine the cost you will incur and the right amount you need to apply. Go ahead and explore the wonders of Navi and meet your financial commitments. All that remains is for you to head over and download the Navi App now to avail the benefits!
Ans: 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.
Ans: 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.
Ans: 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.
Ans: 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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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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