A loan is basically an amount of money that a person borrows from any source for a particular period of time. The person then pays back the amount along with the required interest amount. The definition of short-term loans is pretty clear from the name itself. A ‘short term loan’ is basically a loan that you need to pay back within a short tenure. The general tenure for a short term personal loan is one year. Also, often the amount of money that you borrow in terms of short term personal is relatively smaller.
In other words, a short term personal loan is an amount that you would usually opt for during an emergency.
Some of the most important information that you need to have about a ‘short-term personal loan are:
- These are usually small amounts of money.
- The payback tenure for these loans is generally short.
- The approval time for these loans is also shorter than other types of loans.
- Generally taken during an emergency
- Need a good credit-score
- These loans usually have higher rates of interest.
There are various reasons why you must prefer opting for a short term personal loan rather than a normal loan. The reasons are:
- You can expect to get the approval of your loan within one to two business days. Generally, the loan approval time is longer and may also require a lot of paperwork. But a short term personal loan is relatively easier to avail.
- You can use the money that borrows as a short term personal loan for various purposes. It can be an emergency purpose like a car repair or any other unexpected emergency of money.
- You get the money in your hand within a blink. Right after you receive the approval of the loan, the bank or the source will transfer the whole amount to your bank account.
- Short term personal loan may offer you a flexible tenure of repayment. You may choose to repay the amount weekly or bi-weekly.
- Usually, the short term personal loans are unsecured types of loans. That means that you do not need to put any asset at risk and you will be getting a loan amount without any kind of collateral.
- If you have a good credit history, you can get a loan for a pretty lower rate of interest. But in case of a short term personal loan, it is important to have a good credit history.
- With a good score, you can get higher borrowing limits. This will depend on your existing credit history and your existing debts. If your credit score is good, you can get higher borrowing amounts.
Due to the above reasons, short term personal loans are very popular these days. But, one thing that you must keep in mind is that if you have a bad credit history, the bank might refuse to give you a loan on lower interest rates.