What Are the Different Short-Term Loans in India? Read On to Understand.
A short-term loan is an excellent medium to manage your necessary and sudden expenditures. Such loans require minimal documentation and generally, there are zero requirements for security or collateral as most of such loans by nature are unsecured. The application and grant procedure are even easy and quick and are usually done online. So, if you hold a healthy credit score with a stable income via salary or through self-employment, then you can approach any financial institution like a non-banking financial corporation or bank to place an application for a short-term personal loan.
Simply based on a sound credit profile, you as an applicant can take up a loan like Indiabulls personal loan or Kotak personal loan ranging between Rs 25,000 and Rs 5 lakh or even more. A few fintech also offer an amount of up to Rs 25 lakh under the short-term personal loan deal. For instance, Bajaj Fintech offers medical exigency loans of as high as Rs 25 lakh. Based on your credibility, the interest rate levied on the loan can differ anywhere between 10 per cent and 26 per cent per annum. The loan tenure might range anywhere between 3 and 6 months to 1 and 2 years. For a specific loan, the loan repayment tenure can be as high as 6-7 years. Let’s look at a few of the popular short loan categories –
Home renovation loan –
Though a long-term home loan is an excellent option if you are looking to purchase a new property, a short-term loan might be a great idea if you just need a few renovations in your prevailing home. Also, this makes an excellent investment as the market value of the renovated home rises. You may borrow anywhere between Rs 2 lakh and Rs 40 lakh. However, if you take up higher loan proceeds, it may not be provided under the short-term loan option. For higher amounts, NBFCs and banks can provide a longer loan repayment tenure of anywhere between 10 and 30 years.
Education loan –
Of course, there is secured education loan that has a loan repayment tenure of as high as 15 years, however, for particular education-linked expenses, you can even opt for a short-term loan. The such loan amount can be utilised to mitigate any of your academic expenditures like your tuition fees, hostel fees, buying course-linked equipment and others. While small loans to are available under this specific category, loan proceeds up to Rs 20 lakh can even be granted at a loan repayment tenure of as high as 7 years.
Also Check: Kotak Personal Loan
Wedding loan –
Marriage can really plunge your savings. Also, unplanned, and unexpected expenditures can come up. Under the wedding-linked short-term loan, a member of the groom’s family or a bride’s family can apply for as small as a few thousand to up to Rs 20 to 25 lakh. Based on the amount taken up as a loan, the repayment loan tenure can range anywhere between 3 months to as high as 6 years.
Travel loan –
Genzers and millennials like to spend on travelling. Unlike the last generations, which solely believed in saving sufficiently before deciding to travel overseas, the present day’s youth like taking instant decisions. A travel loan is a good solution particularly if you hold a stable income source and a good credit profile. Again, you as an applicant can select to avail of small amounts like Rs 25,000 – 50,000 or a loan of 10, 20, or 30 lakhs. The maximum loan repayment tenure can be as high as six years.
Medical exigency loan –
While insurance is generally the prudent answer to mitigate medical exigencies, a loan also can act as a lifesaver solution. Whether you do not have healthcare insurance, or you have exhausted the insured proceeds and require higher financial help at short notice, a medical exigency loan can be of great assistance. You can avail a small loan or even an amount of up to 20-25 lakh. Again, to avail a higher loan amount, the loan repayment tenure can be as high as 5 years.
Loan to consolidate your debt –
A short-term personal loan even can be availed to repay your multiple debts. Holding multiple loans get reflected on your credit profile, which hampers your credit score exceedingly. So, many like to place an application for a debt consolidation loan, use the same to settle the debt and then finally repay that single loan.
The next benefit is that a specific loan, like that offered through credit cards, comes with a high-interest rate. While availing an unsecured personal loan may even be approved at a higher rate of interest than the secured one, it would still levy reduced interest than a credit card loan. A debt consolidation loan can be availed for an amount of as high as Rs 25 lakh.
Pension loan –
Some of the lenders offer pension loans to retired individuals. Pensioners can, at times land a tight spot when faced with a sudden high expense like that of instant monetary requirement in events of medical exigency. In a scenario like this, you can avail a pension loan. Loan proceeds can be as high as eight times your monthly pension and tenure may be extended to five or six years.
A small personal loan like a festival loan –
Specific NBFCs and banks even provide small personal loans for miscellaneous expenditures. One of the popular instances of a small personal loan is of festival loan. Festivals can at times result in additional unplanned expenditures. When you witness such a scenario, you must avail a festival loan. Generally, the offered loan proceeds in such loan are up to Rs 50,000.
White goods loan or consumer durables –
White goods like televisions, air conditioners, washing machines, and refrigerators are usually costly. If you require buying multiple such consumer products, it might be recommended for you to avail a consumer durable loan. The proceeds on the loan can be as high as several lakhs. Additionally, a few NBFCs or banks might provide insurance covers too to make the deal customer friendly.