We all face some sudden expenses that arise almost every alternate month which we do not plan or prepare for. Be it for changing an old laptop, clearing a long-standing credit card due, or arranging some quick cash for a dream holiday, short-term loans are often the option we look for. Even for short-term loans, there are various options with different tenures and loan amount. These personal loans are generally availed for less than a year. Hence, with the duration of payments being so short, interest rates charged are also on the higher side. Despite that, it is still preferred due to its ease of approval along with minimum paperwork involved as compared to traditional bank loans.
Here are some of the short-term loan options that you can avail:
Personal loan – This is the most popular among 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. The interest rate charged on personal loans are generally higher than the secured bank loans. The EMIs are customized according to the borrower’s salary so that you don't miss your payments.
Loan against credit card - Loan against credit cards are pre-approved loans, which you can opt for if you are using a credit card. These types of loans are pre-approved by the credit card provider, depending on the borrower's credit card history and credit limit. There is also a processing fee charged which is around Rs 500 to Rs 700. The interest rate ranges between 12 per cent and 24 per cent 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 youngsters and millennials. The main difference between these loans and personal loans is the amount offered. These loans usually offer a smaller amount than personal loans. The money is also instantly made available to the borrower. Some disburse the money within a day, some within half a day, few also within a few hours. To get a loan approved, you just need to upload certain documents like your salary slip, 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 a few hours or a day.
Loans against PPF account - With your Public Provident Fund (PPF) account, you can also opt for short-term loans. However, this comes with certain criteria. For instance, you are eligible to opt for a loan against your PPF money only from the 3rd financial year of opening the account. You can opt for a maximum of 25 per cent of the balance available at the time of applying for the loan. The repayment tenure is set at a maximum of 3 years. To opt for a loan, you need to provide the passbook of your PPF account along with Form D to avail the loan.
Loans against savings and insurance - Also known as demand loans, these are helpful during a 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 loan amount, however, varies and depends on the maturity value of the borrower's savings instruments. Depending on your repayment and past records, banks generally offer loans up to 60 -70 per cent of the borrower's saving value. Some banks also offer loans up to 90 per cent of the borrower's savings.