What Are the Different Types of Short-Term Loans?

Are you planning to go on a vacation but don't have enough funds? You can take that next flight to your dream vacation destination by taking a short-term loan. But before you apply, you must know the different types of short-term loans available in India. These loans serve different purposes, and you can choose the one that best suits your needs. Read on to learn more about how these loans work.  

Understanding Short-Term Loans 

Short-term loans are types of credits that provide you with immediate monetary support in case of emergencies. They act as a temporary solution to bridge the gap between the limited availability of finances and meeting immediate financial requirements.  

There is no restriction on the use of these funds, implying that you can use them to cover pretty any personal or business expenses. You get flexible repayment tenure, ranging from 12 to 60 months, allows you repay the amount without any hassles.  

Also Read: 24-Hour Loans: How to Get Funds Within a Day

What Are the Features of Short-Term Loans? 

Here are a few salient features of short-term loans that make short-term loans the go-to credit option for all:  

• Instant Processing and Approval: Since these are short-term credits, you get   quick approval, and the funds are instantly disbursed. However, your application form must be error-free, and you must meet the eligibility criteria.   
• No Restrictions on the End-Use of Funds: There are usually no restrictions on the end-use of these funds. So, you can use this money to fund your dream vacation, cover your child's education fee, or cover any other expenses. 
• Simple Application Process: The application process for short-term loans is simple and you can do it online. This eliminates the hassles of waiting in a queue or dealing with complicated paperwork.  
• Complete Transparency of Charges: There are no hidden charges associated with these loans. So, you can calculate the overall costs beforehand and know the exact borrowing cost.  
• No Foreclosure Charges Present: With short-term loans, you do not have to pay any additional charge when prepaying or foreclosing the loan (if paid from your own sources). So, if you get any additional funds through bonus or dividends, you can it to pay off the loan and be debt-free soon. 
• Substantial Loan Amount Available: You can get a short-term loan of up to Rs. 30 lakh. . This amount can easily cover all types of financial emergencies without any hassles.  
• Simple Eligibility Criteria Present: Short-term loans usually have simple eligible criteria. You must be aged between 22 and 57 years and must be citizens of India. Also, you must have a minimum of 1-year work experience and a monthly income of at least Rs. 30,000.  

What Are the Types of Short-Term Loans Offered in the Market? 

Following are the short-term loan types that you can turn to for meeting your immediate monetary requirements:  

Personal Loans 

This is a collateral-free short-term credit that you can apply to cover education fees, marriage expenses, travel costs and other requirements. However, you will need to have a high credit score and a strong financial profile to be eligible for Personal Loans.  

Trade Credit 

This is a type of interest-free credit where the lender offers you sufficient time to pay for a purchase. Although the duration extends up to 30 days, you can request a longer tenure to arrange for the funds.  

Bridge Loans 

Also known as ‘gap financing’ or ‘Interim financing,’ you can avail this type of loan that you can avail during the waiting period of another loan.  

Demand Loans 

You can opt for this type of credit against insurance policies or other savings instruments. It allows you to borrow a certain percentage of total value these savings instruments or insurance policy as determined by the lender.  

Bank Overdrafts 

With Bank overdrafts, you can borrow against your current account balance up to a certain limit. You must know that, taking an overdraft does not restrict you from withdrawing from that account.  

Also Read: Getting Rapid Financial Support with 1-Hour Loans by Phone

Steps to Apply for a Short-Term Loan 

Applying for Poonawalla Fincorp’s Short-Term Personal Loan is easy as our loan application process is fully digital. To apply for a loan, you just need to follow three simple steps: 

• Step 1: Click on the ‘Apply Now’ button.
• Step 2: Fill in the required details on the loan application form.
• Step 3: Upload necessary documents.

On successful verification, the loan amount will be disbursed into your bank account instantly.

Conclusion 

The availability of different types of short-term loans ensures that you get access to funds to meet your immediate personal and business finance needs. While applying for a short-term loan, do your research well, weigh the pros and cons of different types of loans and choose the right one to suit your needs.  

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply