Short-term loans are generally repaid within a few months or often up to a year. You can take them to meet urgent financial needs, such as unexpected expenses or cash flow shortages. With quick approval processes and flexible terms, Short-term Loans provide quick access to funds when needed most.
What is a short-term loan?
A Short-term Loan is a financial loan that provides quick access to funds, typically requiring repayment within a few weeks to a year. These loans cover urgent expenses, such as medical bills or home repairs. They usually come with higher interest rates compared to Long-term Loans.
Key characteristics of short-term loans
- Repayment duration: Repaid within a few months to one year.
- Quick approval: Fast processing times within 24 to 48 hours.
- Higher interest rates: This comes with higher interest rates due to the short repayment period.
- Minimal documentation: Require less paperwork and fewer eligibility criteria than traditional loans.
Types of short-term loans
- Loans on Credit Card
Loans on Credit Cards are pre-approved financing options based on the cardholder’s credit usage and repayment history. These loans allow you to access funds quickly without any additional documentation. The loan amount is based on the available credit score, and repayments are made through easy monthly instalments.
- Consumer Loan for MSMEs
Consumer Loans for Micro, Small, and Medium Enterprises (MSMEs) are Short-term Loans for supporting small business owners in managing cash flow or funding operational expenses. It offers flexible repayment terms and competitive interest rates.
- Loan against Gold
A Loan against Gold allows you to secure financing by submitting gold jewellery or coins as collateral. These loans provide easy access to funds, with lower interest rates compared to Unsecured Loans. It is determined by the gold's market value, and repayment terms can be flexible, making it an attractive option for those needing immediate funds.
- Personal Loan
These loans are used as a quick financial solution for urgent needs, offering flexibility in repayment terms. Being unsecured, you can easily access the funds without any collateral to cover unexpected expenses or pay debt.
Benefits of securing short-term loans
- Collateral free loan options
Many Short-term Loans are unsecured, meaning you do not need to provide collateral to secure the loan. It reduces the risk of losing valuable assets and makes loans more accessible for individuals who may not have property or savings to provide as a guarantee.
- Easy to secure
Short-term Loans have a simple application process with minimal documentation required. It helps you to get approvals quickly and receive funds easily. It is highly beneficial for those facing urgent financial needs, providing timely solutions without extensive paperwork or lengthy approval times.
- Flexible usage of funds
These loans can be used for several purposes, like covering unexpected expenses, consolidating debt, or funding small businesses. This makes it a versatile option for managing cash flow and addressing immediate financial challenges.
- Quick repayment
These loans come with shorter repayment periods, ranging from a few months to a year. This allows you to clear debts faster and regain financial stability.
Also Read: Personal Loan documentation simplified
Conclusion
Short-term Loans serve as an immediate solution for your urgent financial needs and come with no collateral requirement. With easy access to funds and flexible end-use options, you can enjoy the benefits for a few months or a year. But you should know the high interest rates and ensure that repayments are possible quickly.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
