Short term loans are loans which essentially provided for a short tenure of less than one year. These are usually one time loans and can come in useful in case you are not able to obtain credit from a bank for a longer tenure loan. In case of these loans, the interest is usually payable on the principal advance amount and repayment tenures are shorter as compared to other types of loans.
These loans are also made available to customers and businesses and may be provided by private finance companies or banks. These loans are generally unsecured however in case they are being offered by banks, they may require that you secure these loans with some collateral. Short term loans are also referred to as short term finance or short term instalments loans because they can be paid back in monthly instalments.
Short term loans come with features that may differ from one lender to another. They may also differ when it comes to comparing short term loans in the US vs those in the UK. Some of the features of the short term loans are:
Since short term loans can be payday loans or Personal Loans payable within 12 months or less the interest rates may differ. Another factor that affects these interest rate is the institution that offers these loans.
Many a times, the borrower may be in a position where most lenders have refused to issue loans to them as a result of bad credit history. There are financial institutions that will offer loans even if the credit history is bad. The interest rates may be higher but the loan will still be approved. There may even be situations where bank will approve a payday loan for an individual with a bad credit histories and adjust the interest rate according to how bad the history really is, among other factors.
At times institutions may offer short term loans to individuals without carrying out any checks of the credit history. This is a facility that is provided at the discretion of the institution. These short term loans can also be extended to companies that need money to meet their financial obligations and don’t have a line of credit extended to them by their banks. There may even be times when these short term cash loans can also be availed by students who are finding it difficult to meet their payments for rent or tuition fee.
Going in for a short term cash advance is a decision that should not be taken lightly. If you do decide to take a short term loan you must then decide if you intend on taking it from a bank or a private lenders. So let’s take a look at banks and private lenders match up to one another for these loans.
In general, short term loans or payday loans should remain an absolute last resort because they tend to be very expensive. Even if you must take one, make sure you take only the amount that you need and no more.
While in the US and in the UK you have the option of short term finance, in India this option is not available. What is available in India is slightly different.
In India, loans that come with interest rates in excess of 100% are non-existent. What is available are a variety of short term loans that are meant to help you with your personal finance as well as finance for your companies. These short term loans come in various forms like personal loans, short term loans for SME and even short term Bridging Loans for individuals buying a house.
These loans too tend to be secured and unsecured depending on the type of loan you take, which also decides the interest rates that you will be required to pay. The loans are provided by banks and non-banking financial companies
There are various loans that you can take and payback in a year’s time in India. They range from personal loans to loans for business.
The eligibility criteria for these loans changes for each loan. It is different when it comes to bridge loans and personal loans. With SME Loans too, the eligibility criteria will differ since they can be taken by companies rather than individuals. A general criteria for these loans could be:
The interest rates charged for these loans depends on the type of loan you go in for. For example Personal loans come with interest rates that can range from 12% per annum to 20% per annum. Some banks offer SME short term loan at interest rates that range from 12.5% per annum to 14% per annum. HDFC offers Bridging loans for 12.55% per annum to 13.4% per annum.
The advantage of these short term loans offered in India are that they are tailored to suit everyone’s specific needs. If you need to finance a vacation you can go in for a personal loan, if you want to buy a new house after selling your old one you can go in for a bridging loan. Even if you need to finance a company you can go in for a bridging loan or an SME loan to ensure continued operations.