9 types of short-term loans for your urgent financial needs

Short term loan

Short-term loans are a type of credit that is borrowed for a short period of time, usually less than a year. These loans are designed to help individuals and businesses meet their immediate financial needs. In India, there are several types of short-term loans available, each with its own unique features and benefits. In this blog post, we will discuss the different types of short-term loans, along with the pros and cons and eligibility criteria.

 

A look at different short-term loans offered in India

  • Payday loans Payday loans are a type of short-term loan that is designed to help individuals meet their immediate financial needs until their next payday. These loans are usually for small amounts and are repaid in full on the borrower’s next payday. Payday loans are easy to obtain and do not require a credit check, making them a popular choice for those with poor credit.
  • Overdraft loans Overdraft loans are a type of short-term loan that is linked to a borrower’s bank account. These loans allow borrowers to withdraw more money than they have in their account, up to a pre-approved limit. Overdraft loans are usually for small amounts and are repaid when the borrower’s account is credited.
  • Personal loans Personal loans are a type of short-term loan that is designed to help individuals meet their immediate financial needs. These loans are usually for larger amounts and are repaid over a period of months or years. Personal loans are available from banks, NBFCs and fintech’s.
  • Credit card loans Credit card loans are a type of short-term loan that is linked to a borrower’s credit card. These loans allow borrowers to withdraw cash from an ATM or make purchases up to a pre-approved limit. Credit card loans are usually for small amounts and are repaid when the borrower’s credit card bill is due.
  • Business loans Business loans are a type of short-term loan that is designed to help businesses meet their immediate financial needs. These loans are usually for larger amounts and are repaid over a period of months or years. Business loans are available from banks, credit unions, and other financial institutions.
  • Bridge loans Bridge loans are a type of short-term loan that is designed to help individuals or businesses bridge the gap between two transactions. These loans are usually for larger amounts and are repaid when the borrower’s next transaction is completed. Bridge loans are commonly used in real estate transactions.
  • Invoice financing Invoice financing is a type of short-term loan that is designed to help businesses meet their immediate cash flow needs. These loans are secured by the borrower’s accounts receivable and are repaid when the borrower’s customers pay their invoices.
  • Trade credit Trade credit is a type of short-term loan that is extended by a supplier to a buyer. These loans allow buyers to purchase goods or services on credit and are repaid when the buyer’s customers pay their invoices. Trade credit is commonly used in business-to-business transactions.

 

Advantages and disadvantages of short-term loans

There are both advantages and disadvantages of a short-term loan. Let’s understand some of them:

Advantages of short-term loans include the fact that they are typically easier to obtain than long-term loans, as they require less paperwork and have lower credit requirements. They also have a shorter repayment period, which means that borrowers can pay off the loan quickly and avoid accruing interest over a longer period of time. Additionally, short-term loans can be a good option for businesses that need to cover unexpected expenses or seasonal fluctuations in cash flow.

However, there are also several disadvantages to short-term loans. One of the main disadvantages is that they often come with higher interest rates than long-term loans, which can make them more expensive in the long run. Additionally, short-term loans typically have smaller loan amounts, which may not be sufficient for larger expenses. Finally, short-term loans can be risky for borrowers who are unable to repay the loan on time, as they may face penalties and damage to their credit score.

 

Which one is for you?

Choosing the right short-term loan depends on your financial situation and needs. The shorter the loan term, the less you have to pay in the long run, but monthly payments may be higher. To choose the right short-term loan, you should consider the loan amount, repayment period, interest rate, and fees. You should also check your credit score and compare offers from different lenders. It is important to read the terms and conditions carefully and make sure you can afford the loan before applying.

 

Requirements for availing of a short-term loan

Short-term loans have shorter repayment tenure and no collateral requirement. To apply for a short-term loan online in India, you can register on a lending platform, provide basic KYC details, and get same-day loan approval and disbursement. You can also get the best deals on short-term loans through Andromeda Loans

To get a short-term loan in India, you need to meet certain eligibility criteria. These may include being an employee of a private limited company or a public sector undertaking. Short-term loans can be approved within a day. Banks and reliable lending companies that offer short-term loans usually have a repayment period of 60 to 120 days.

Short-term loans are an important source of credit for individuals and businesses in India. There are several types of short-term loans available, each with its own unique features and benefits. It is important to carefully consider the terms and conditions of each loan before borrowing to ensure that it meets your financial needs and is affordable.