Short-term loans are a common way for people who need money to get by. These loans are typically made by banks and are unsecured, which means that the borrower does not need to provide any collateral in order to get the loan.
The repayment period for short-term loans typically ranges from six months to one year, and funds are typically deposited into the borrower’s account within one to two days of approval.
Personal loans, credit card loans, overdrafts, and bridge loans are all examples of short-term loans. People with low credit scores and monthly incomes of at least 25,000 are frequently approved for personal loans.
Borrowers must show proof of identity, such as an Aadhaar card, voter ID, or PAN card, and banks may also ask for an ITR or Form 16 to find out how much the borrower makes now. Typically, banks make this loan’s EMI more appealing than a long-term loan.
Another short-term loan, a bridge loan, is especially helpful for people who want to buy a new home while also selling their old one. The loan is for 12 to 18 months, and banks will give the borrower up to 70% of the value of the property based on their income.
These loans typically come with processing fees, and the property needs to be mortgaged. Although it is possible to convert it into a long-term home loan under certain conditions, the interest rate is higher than that of long-term loans.
Pre-approved loans, also known as credit card loans, are issued by a bank immediately following cardholder confirmation. No documentation is expected for this credit, and it has a reimbursement time of one to five years that can be paid in EMIs.
Despite the fact that short-term loans can be useful in emergency situations, borrowers may have to pay higher interest rates and other fees. Before deciding to take out a loan, it is critical to carefully consider its terms and conditions.
