Short Term Personal Loan Benefits
Whether it’s a marriage expenditure or a travel expense, short-term personal loans are ideal to meet short-term financial needs. Short-term personal loans are unsecured loans that can be used for any purpose. These type of loans do not require any security or collateral. The short-term loan amount can range from Rs.50,000 to Rs.30 lakhs. The loan tenure can be between few months to 5 years.
Features of short-term Personal Loans
Listed below are the benefits and features of short-term personal loans:
- This type of loan addresses an individual’s short-term financial needs.
- No collateral or security required for short-term personal loans.
- Quick and easy documentation process for short-term personal loans.
- Personal loans can be used for any purpose like holiday expenditure, wedding expense, school fees, house repair work, furnishing, travel expense, etc.
- The loan amount ranges from Rs.50,000 to Rs.30 lakhs.
- These loans can also be transferred to another bank.
Factors to consider while choosing a Personal Loan
There are several factors to consider while choosing a personal loan in order to ensure the borrower gets the best possible deal. Factors such as:
Interest rates: Banks offer lower or higher interest rates depending on the borrower’s occupation, income, and credit history. Before choosing a bank, compare the personal loan interest rates offered by different banks, and opt for the one offering the minimum interest rate.
Service charges: Processing fee, pre-payment charges, and documentation fee are some of the service charges that are added to the loan amount. Choose a bank that charges a reasonable fee for these services.
Equated Monthly Installments: Compare the EMI options offered by various banks, before choosing the one that offers the optimum EMI option.
Loan tenure: The repayment period for short-term personal loans range from 1 year to 5 years. In some cases, the loan tenure is less than a year.
Loan issue time: The main purpose of a short-term personal loan is to fulfill the immediate financial needs of a customer. Most banks process and issue loans within 48 to 72 hours.
Eligibility criteria for short-term Personal Loans
To obtain a suitable short-term personal loan, the borrower should meet the following eligibility criteria:
- Must be a salaried employee or a self-employed professional.
- A regular income to pay back the loan on time.
- Good credit history.
- The borrower should be between 21 to 60 years of age.
Documents needed to apply for a short-term Personal Loan
The documentation process in the case of personal loans is very simple, and hassle-free, with minimum paperwork, and quick processing time. The following documents are needed for loan application:
- ID proof.
- Address proof.
- Bank statements from the last 6 months.
- Payslips (for salaried employees).
- Guarantor’s ID, and address proofs.
Interest rate and fee details
Listed below are the applicable interest rate and fee for short-term personal loans:
||Rs.50,000 to Rs.30 lakhs
||6 months to 5 years
|Loan issue time
||48 to 72 hours
||12% to 20% p.a.
||Varies with banks
|Processing fee rate
||1% to 3%
Banks offering short-term Personal Loans
State Bank of India offers specialised loan schemes for salaried individuals during major festival seasons. HSBC India offers short-term personal loans with a flexible loan repayment period of up to 5 years. Borrowers can avail a maximum loan amount of up to Rs.15 lakhs. Repayment options include EMIs, an ECS or an SI on the borrower’s bank account.