All you need to know about short term loans
In life, from time to time, we might encounter a shortage of funds to meet some unforeseen financial obligations or even unexpected immediate financial emergencies.
That's where short term personal loans can prove quite useful. Basically, short term personal loans are loans that can be repaid within a one to two-year period. Short term personal loans are unsecured loans and as such, it is not required by you to post any sort of collateral as security.
The funds are credited to your account quickly after the loan gets approved. However, it's important for you to note that the term "short term" is not due to the speed at which the funds are disbursed but the limited tenure for repayment.
When you opt for a short-term loan, the money outflow that goes into paying the total interest is significantly lower compared to a long-term loan. As a result, a short-term loan is cheaper than a long-term loan.
Advantages of short term loans
Lower time to incur interest
Given that short term loans need to be paid off within about a year in most cases, the total interest payments are lower too. Especially when compared to long term loans, the interest amount you pay is considerably less.
Faster funding time
Due to their shorter maturity period, short term loans are less risky than long term loans. This is because a borrower's capacity to repay the loan is less likely to change much over the short timeframe. As a result, the time taken by a lender to underwrite process the loan is shorter, which means you'll be able to obtain the needed funds more quickly.
Easier to acquire
Short term loans can be very useful for those who have below-par credit scores as the requirements are usually easier to fulfil. That's partly because short term loans are generally taken for small amounts.
Disadvantages of short term loans
The main disadvantage of a short term loan is that it's only for small amounts. This is so that the borrower won't be burdened with large monthly payments, thanks to the loans involving smaller amounts that are repaid sooner.
How to apply for a short-term loan online?
There are two different ways to go about applying for short term loans online and below, we take a look at them:
If you're using a desktop computer or kiosk, you can head over to the lender's official website. Once there, click on the section marked for loans and from the different types of loans it presents you, select short term loan. You then have to complete the application process online, providing the required details. The documents required such as ID proof, address proof and income proof can be submitted online.
This is fast becoming the preferred way of applying for short term loans due to the proliferation of smartphones among the population. Usually, the lender's application can be downloaded from the Google Playstore or Apple app store following which, the entire loan application process can be completed using the mobile phone only. No physical documents need to be submitted and the customer does not need to visit any place to get the loan approved and disbursed to his bank account.
Here are the eligibility criteria for obtaining a short term loan:
- You must be an Indian resident
- You must be currently employed for at least the last six months
- You should have professional experience lasting over a minimum period of one year
- You need to be employed with a private limited company or public sector undertaking. The latter includes central, state, and local bodies.
- Your minimum income should be Rs. 20,000 per month at least. And if you happen to reside in Delhi or Mumbai, your monthly income has to at least Rs. 25,000.
- You must be between 21 and 60 years of age.
What documentation do I need for getting a short-term loan?
You need some basic documents in order to obtain a short-term loan. These usually include:
- ID proof
- PAN Card
- Proof of residence (Passport/Driver's license/Voter's ID/Phone or Electricity bill)
- Last three months' statement of bank where your salary is credited
- Last three months' salary slips
- One passport-size photograph
However, do note that the documents needed can change from one lender to the next, so ensure you check with your lender which specific documents will be needed from your end for getting short term loan.
We often face situations where we are in dire need of funds, such as for wedding expenses, school fees, or even medical emergencies. At mPokket, we aim to meet your financial needs and become a part of your life's journey.
That's why, If you are seeking an instant student loan or salaried loan and wondering where to turn for some quick credit, simply download the mPokket online loan app, register by uploading a handful of documents, and post the online loan approval, borrow instant personal loans of up to Rs. 30,000. mPokket instant loans for students and loans for salaried are both credited straight to your bank or Paytm account.
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