Expenses never come invited. A medical emergency, a cash crunch or even shortfall of funds during wedding planning, no one can determine when all the above can happen. In such situations, funding such expenses is the most important thing to be done. This is where a short-term personal loan can help you.
Why Are Short-term Personal Loans Gaining Popularity?
A latest study estimates that India has a credit-eligible population of around 220 million. Out of this, only one-third -72milion- are ‘credit-active’ customers or have a live account with a bank or a financial institution. The remaining 150 million customers either don’t meet the age and income requirements or have never availed a credit product.
In order to bring more people under the financial umbrella, marketplaces like IndiaLends are trying to meet the demands for small loans. The USP of our platform is the instant approval of loans up to ₹2 lacs. As soon as the approval is given, it takes no time to disburse the amount.
Another advantage offered by short-term personal loans is meeting the demands of individuals who have little or no credit history. Such individuals find it difficult to approach traditional institutions as they don’t cater to New-to-credit. This is where small loans are booming in the credit world and gaining popularity.
Here are a few more reasons why individuals opt for small-amount personal loans:
→ Minimum paperwork and Quick Disbursal
As mentioned above, short-term personal loans provide quick disbursals. The minimum paperwork process helps in reducing the time taken otherwise.
→ More accessible
Short-term personal loans often cater to new-to-credit individuals and people with low credit score. Therefore, more individuals are now able to get financial help from credit providers.
→ No long-term commitment
Short-term personal loans are provided for smaller amounts and shorter tenure. Therefore, the risks of defaults associated with the borrower are less.
→ No collateral
Small personal loans do not require any collateral and are given on the basis of the customers’ profile. For customers with poor credit score or no credit history, the lenders assess the creditworthiness with the help of the social graph and digital footprints.
Are these Payday Loans?
Payday loans are still at a nascent stage in India. The concept of payday loans is highly debatable. Some individuals feel such loans bring a relief to meet immediate requirements whereas some feel it leverages the desperation of the individual. A payday loan is a small loan that is lent at a high interest rate on a mutual agreement that the amount will be repaid till the next payday. However, short-term personal loans are aligned with traditional personal loans and are given for a shorter tenure.
Moreover, short-term personal loans are provided for a relatively larger amount. Although it is lesser than traditional personal loans, it is comparatively more than payday loans. In some situations, a payday loan could be part of a short-term personal loan.
How is Short-Term Personal Loan different from Traditional Personal Loans?
A short-term personal loan can be availed for a period of 3 months and can go up to a maximum of 2 years whereas traditional personal loans can be taken over an extended amount of time. Moreover, as the name suggests, short-term personal loans are given for smaller amounts, at max for ₹2 lacs whereas traditional personal loans can go up to ₹50 lacs.
When and How to Use Short-Term Loans?
Short-Term loans are mainly used for immediate requirements. Here are a few situations when you can use your short-term loans:
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To meet cash-flow requirements in business
Small amount personal loans can meet the immediate cash-flow requirements in business. As the loans are quick and instant in nature, it is a great way of meeting fund requirements in emergencies.
When in a medical emergency, health should never be compromised. In order to avoid the hassle of applying to different banks and wait to start the treatment of the patient instantaneously, you can avail a small personal loan. Since, With minimal paperwork involved, the funds can be transferred to your bank account in no time.
Planning a vacation but don’t have money? A small amount personal loan can be your ally in such times. A personal loan will help you plan your expenses at low EMI’s.
There’s always something that can be done to your house. And no matter how much you save, you can end up falling short of ash in the end moment. A small loan can help you cover your expenses in such times.
Online Short Term Loans at Lowest Interest Rates
The top online short term loans at lowest interest rates are:
Name
|
Loan Amount
|
Tenure
|
| IIFL |
₹15,000-₹1 lac |
12 months |
| DMI |
Up to ₹2 lacs |
12 months – 24 months |
| Clix |
Up to ₹1 lacs |
12 months |
| Paysense |
Up to ₹2 lacs |
12 months – 24 months |
| IndoStar |
Up to ₹1 lacs |
12 months |
Things to Consider When Applying for a Short-Term Personal Loan
When applying for a small amount personal loan, you need to consider the following factors:
→ Whether you meet the eligibility criteria
The eligibility criteria for a small amount personal loan are:
• Minimum age – 25 years
• Citizen of India.
• A good credit score(750 or above).
• Valid Indian bank account
• Minimum monthly income – ₹10000
→ Whether you have the relevant documents
The documents required for small amount personal loans could vary from lender-to-lender. However, the general documents are:
• Proof of Identity(Aadhaar/PAN card/Voter ID/Passport)
• Proof of Age(Aadhaar/Driving License/Voter ID/Passport)
• Bank statement for last 6 months
• Proof of Income(salary slips of last 3 months or last year ITR or income declaration)
• Passport-sized photograph(s)
IndiaLends is an online marketplace that makes credit products such as personal loans, credit cards and free credit reports easily accessible. We also provide small amount personal loans up to ₹2 lacs at EMI’s of ₹1400. If you have any questions related to small loans, you can comment below!
