Personal loans taken out in an emergency are known as emergency loans. Although there are many different kinds of loans, emergency loans are used by people who need money immediately for an urgent situation. Unsecured short-term loans are easy to get, need little paperwork, and have lower interest rates as they are unsecured, so you don’t have to use an asset as security.
Short-term loans differ from other loans in that you can use them for any specific need or emergency that may arise. This loan is meant to pay for things like urgent home repairs, paying off debt, last-minute shopping, buying household items, school or tuition costs, etc. Less paperwork is needed to get a loan, the process is quick, the interest rates are competitive, and there are no prepayment penalties.
What are emergency loans?
Emergency loans are small cash advances that are made available right away by banks, NBFCs, and other internet lenders. Emergency loans can be helpful when you need instant money to deal with an emergency. Most of the time, these loans are used for things like short-term training, vacation planning, fixing up the house, and other needs. You can obtain emergency Loans in the range of Rs. 5,000 to Rs. 5 lakhs. The repayment period is between 30 and 90 days. Interest rates begin at 0.1% daily.
Criteria to fulfil to get Short-Term Loans
The eligibility differs from lender to lender. However, the main criteria for short-term loans are:
- a citizen of India
- paid employees, independent contractors, or business owners
- Over the age of 21
- At least have a salary of at least INR 18,000
- Work experience of at least two years is needed if employed on a salary. If a business owner, the firm must have been in operation for at least one year.
Documents for Emergency Loan Applications
- PAN cards, Aadhaar cards, driver’s licenses, and passports serve as identity documents.
- Passport, rental agreement, utility invoices showing current address, such as those for a landline, water, or power connection
- Income documentation such as pay stubs, bank statements, or Form 16
Perks of Short-Term Personal Loans
- Fast Approval
Your desire for money becomes acute when a crisis arises. If the loan sanctioning process takes a long time, it defeats the very purpose of taking a loan. On the other hand, a short-term loan can be approved swiftly and with little paperwork.
Short-term personal loans are not secured by anything. In other words, you qualify for the loan without offering any collateral.
- Affordable Interest Rates
The short-term loan is only for a short time, so the interest cost is not too high. This makes it affordable for borrowers.
- Loans of Various Amounts are Accepted
The loan amount is based on many variables, including your income, credit score, and ability to repay the loan. If these things show that you are a responsible borrower, you might get the amount you need or even more.
- No commitment for the long term
When you take out a short-term personal loan, you avoid making a long-term commitment. Instead, you get the money you need, pay it back in a year, and then go on with your life.
- Less Time to Accumulate Interest
Most short-term loans have to be paid back within a year, so the interest you pay is less than what you would pay on a regular personal loan.
What Are the Interest Rates on Personal Short-Term Loans?
Different loan companies charge different interest rates. In most cases, the interest rate will begin at 10.99%. Your credit score is a major factor in the interest rate offered by lenders. Thus, before accepting the first loan offer that comes your way, it is vital to research and look at the offers for short-term personal loans to find the lowest interest rate you can get.
How Do I Apply Online For Short-Term Loans?
The steps you need to take to apply online for a short-term personal loan in India are:
- Before applying for a loan with a certain lender, evaluating other loan offers is always a good idea. Make an informed choice by knowing the loan amount being given, the interest rate being charged, the processing fees, and any late payment fees that may apply.
- Check Your Loan Eligibility: After selecting a lender, review the lender’s needs for short-term loan eligibility. Before you start the loan application, be sure you meet the eligibility requirements.
- Apply online by completing the form: Fill out the application form with your personal information, the amount of money you want to borrow, how long you want the loan to last, etc., and send it in with the paperwork.
- Find out the loan’s status: After reviewing your application, the lender will quickly let you know whether it has been approved or turned down.
- Receive Cash: If your loan application is accepted, the funds will be sent to you.
How does a Personal Short-Term Loan operate?
You consent to take out a loan from the lender for a sum you can afford.
- Interest and other loan conditions are applied to the amount you want to borrow.
- You agree to repay the loan in full, along with interest, on the agreed-upon date.
- Before approving the loan, the lender runs a credit check to know your loan history.
- If your loan is accepted, you will get the funding.
- You begin making payments from when the loan is due until it is fully repaid.
An emergency loan may be the best option when you need money quickly to pay for something that comes up out of the blue. But they usually have high-interest rates that can worsen your financial situation if you’re not careful. So consider them last after you’ve tried everything else. Don’t just apply for any loan; research to ensure you’re applying for the right loan.
Piramal Finance is always there for you, guiding you in every possible way. Do contact Piramal Finance for help with a short-term loan during an emergency.