A short-term loan as the name implies is a loan offered for a short duration of time, ranging from one month to one year. Short-term loans are useful for people who can’t opt for loans from banks for a long tenure. The advantage here is there’s no need to mortgage amount or property as security throughout the entire process. MercuryNews provides an insight on how to get emergency loans, various lenders, and the entire process.
Types of short-term loan
There are many short-term loans rendered depending upon one’s needs and convenience:
- Merchant cash advances
This loan is a advance cash payment, that works much like a loan. The loan is rendered through lender’s credit facility.
- Lines of credit
This type of loan is basically like a credit card. A definite credit limit is set and the borrowers can acquire money accordingly, and later pay in installments.
- Online loans
Online loans are relatively easier to obtain, they are approved within a day.They are transferred to the borrower’s account.
The interest rates of short-term loan seems to be higher than the standard loans but the short duration determines how the interest is actually gauged. The interest rates are competitive due to the sundry lenders in the market.
The long-term loans are difficult to pay back considering the huge sum involved, the approval waiting period is huge as well. It involves a number of complexities due to innumerable regulations. Short term loans are a more viable option comparatively. While most of the traditional businesses rely on long-term loans, the new generation does opt for the short-term loan in certain cases.
Short-term loans have several advantages over standard loans.
Short-term loans have several benefits due to their accessibility. It can be used at your disposal depending upon your needs be it for buying a simple gadget, a wedding expense, or as a part of your house expenditure.
- Short duration
Since the loan is rendered for a very short time ranging from a month or a year, and it largely involves a small amount it is easier to pay back the money rather than opting for standard loans.
- Quick processing
Since these loans are unsecured- no security is involved as money or property they are disbursals are quick.
- No documentation
Since it’s a short-term loan there’s not much documentation involved in the entire process, the process is quite hassle-free.
- Minimal installments
A small loan amount significantly decreases the number of installments and is easier to waive off.
To apply for a short-term loan
- one should an Indian citizen,
- a salaried employee or self-employed
- Should be within 20 to 60 years of age gap
- Should have a minimum income of 12,000-15,000
You can acquire loans online or through the bank. The process involves these steps:
- Submission of financial, basic personal, professional details.
- Submission of documents.
- Notification about loan approval within few days.