Whether it’s changing an old laptop, sorting out a long-standing credit card, or getting quick cash for that dream vacation, short-term loans are often the option we’re looking for. .
We all face sudden expenses that occur almost every couple of months that we don’t plan or prepare for. Whether it’s changing an old laptop, sorting out a long-standing credit card, or getting quick cash for that dream vacation, short-term loans are often the option we’re looking for. . Even for short-term loans, there are different options with different durations and loan amounts. These personal loans are generally used for less than a year. Therefore, since the term of payments is so short, the interest rates charged are also higher. Despite this, it is still preferred due to its ease of approval and minimal paperwork involved compared to traditional bank loans.
Here are some of the short-term loan options you can avail of:
Personal loan – It is the most popular among the short-term loans offered by banks. The minimum amount in case of personal loans offered by most lenders is Rs 30,000 and goes up to Rs 5 lakh. Interest rates charged on personal loans are generally higher than secured bank loans. EMIs are personalized based on the borrower’s salary so you don’t miss your payments.
Credit card loan – Credit card loans are pre-approved loans you can take if you use a credit card. These types of loans are pre-approved by the credit card provider, based on the borrower’s credit card history and credit limit. There is also a processing fee which is around Rs 500 to Rs 700. The interest rate varies between 12% and 24% per annum, depending on the bank. The repayment tenure ranges from 3 months to 2 years and is generally flexible.
Instant Loans – Recently in India, instant loans have gained popularity, especially among young people and millennials. The main difference between these loans and personal loans is the amount offered. These loans generally offer a lower amount than personal loans. The money is also made instantly available to the borrower. Some disburse the money in a day, others in half a day, some also in a few hours. To get a loan approved, you just need to upload some documents like your payslip, PAN, bank account number where you will receive the money and some other details. Depending on the company, once the loan is approved, you can get the loan credited to your bank account, within hours or within a day.
Loans on PPF account – With your Caisse Publique de Prévoyance (PPF) account, you can also opt for short-term loans. However, it comes with certain criteria. For example, you can only opt for a loan on your PPF money from the 3rd year of account opening. You can opt for a maximum of 25% of the balance available at the time of the loan application. The repayment period is set at a maximum of 3 years. To opt for a loan, you must provide the passbook of your PPF account with the D form to benefit from the loan.
Loans on savings and insurance – Also known as demand loans, they are useful in times of financial emergency. These loans are offered by both banks and NBFCs, against small savings instruments, such as National Savings Certificates (NSCs) or insurance policies. The amount of the loan, however, varies and depends on the maturity value of the borrower’s savings instruments. Depending on your repayments and track record, banks typically offer loans of up to 60-70% of the borrower’s savings value. Some banks also offer loans up to 90% of the borrower’s savings.
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