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As the name suggests, short term loans are personal loans with tenures of only 2 or 3 months. This is a fraction of the repayment time normal personal loans come with. However, due to a number of advantages these loans provide, they have become a hit over the last few years.
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As the name suggests, short term loans are personal loans with tenures of only 2 or 3 months. This is a fraction of the repayment time normal personal loans come with. However, due to a number of advantages these loans provide, they have become a hit over the last few years. This article will highlight some of these benefits that have made them so popular with other borrowers so you can make informed borrowing decisions when in need of financial help in the future.
Decent loan amount.When you think of a short term loan, you don’t imagine very large loan amounts. And though this is true, most of these loans provide respectable amounts of money. Some of the better lenders will offer up to 2 lakhs, some might provide even more if your profile is good.
Quick sanctions.Most lenders use the internet to bring customers super-quick sanction times. Some lenders will even offer instant approvals and sanctions on the same day directly into your account. This is something that’s rare with normal personal loans. Repeat customers may even enjoy instant transaction on their successive loan applications.
App-based procedure.Some of the new-age lenders have taken their loan offerings to the app format. This means you can do everything from apply to repay the loan from your phone and with just a few taps of your finger. Just install the app, fill out the required information, upload the basic documents required and voila!
No need for credit ratings.Considering that the loan amounts involved are significantly lower than usual personal loans, some of the leading providers of a short term loan offer loans without the need of a credit rating. Instead, they rely on social scores to determine your eligibility. This is especially useful for those without a credit score or those with not much of credit history.
Lower interest rates.Interest rates are probably the most important aspect of any loan offering. And again, a short term loan can prove to be advantageous in this regard. Most lenders levy an APR of 24 to 30 percent on such loans. This might sound like a lot but in reality, it works out to around 2 or 2.5 percent per month. If you were to calculate this on a loan amount of Rs. 50,000 the interest amount would be equivalent to buying your maters a couple of beers.
Prepayment charges.Another amazing advantage of short term loans is that most of them allow you to prepay the loan sans any prepayment charges. This can be very helpful to save on the total interest amount payable and get out of debt quicker, without any charges.
These were 6 of the more substantial benefits of a short term loan. We hope this information in this article will help you choose the right loan product when in the market for one. If you have any doubts, remember that all the providers of such loans will be more than willing to answer your questions.
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