A Short Term Personal Loan

What is a personal loan?

Personal loans are classified based on collateral; collateral is a property or a pledge given to the bank or the lender on the first step of money lending. Collateral is given, generally in the form of a property ownership document,  car, house, gold or another valuable asset. Suppose the borrower fails to pay the EMI for three consecutive months. In that case, they will lose the collateral, and the bank sells them in a public auction where the money is taken, and the money left out to pay is then added to the borrower’s deficiency account. This type of process happens in secured loans. The various types of secured loans available in the market are pension loan, house loan, property loan, automobile loan, insurance loan etc. These loans have a higher rate of interest as compared to others. Fullerton India personal loan has good deals.

What is a short term personal loan?

As the names suggest, a short-term loan is a loan offered to a person for a short period, usually between one month and a year. These are beneficial to people who cannot obtain longer-term loans from a bank or lender for various reasons. Short-term loans are usually unsecured, which means you do not have to put up any money or property as collateral. Short-term loans may also be referred to as short-term instalment loans or short-term financing.

How is a short term personal loan different from a long term personal loan?

Collateral is not needed for short-term personal loans:

In terms of repayment, short-term loans pose less of a risk to lenders. As a result, your lender can require you to use collateral to obtain a long-term loan, but not a short-term loan. Gold, an investment, or any other valuable asset may be used as security.

Long-Term Personal Loans assist you in fulfilling vital financial obligations:

Although short-term loans are better for emergencies, long-term loans make it easier to reach your life goals. For example, you might use a long-term target to pay for your child's overseas education, cover a medical cost, or finance a wedding. You can check personal loan eligibility.

Personal loans for a short period are more readily available:

With a few taps and swipes on your mobile, you can now apply for short-term and small personal loans online. On the Internet, many players provide such services. You can usually get up to INR 2 lakh in support, with terms ranging from one day to three years. The first step in finding the best match for your financial needs is to select the right lender.

Personal loans for a long extended period can have a lower interest rate:

Before making a loan bid, lenders look at your financial profile. Long-term loans appear to have lower personal loan interest rates because the financial condition is unlikely to change soon.

Long-term personal loans will help you lower your monthly payments:

Long tenures allow you to spread out the payments over a longer time, lowering each value individually. You can spread out large and small personal loans over many years to lower the monthly payment. Calculate your instalments using an EMI calculator, and pick the shortest term you can afford. As a result, you will not have to pay any additional interest in the long run.

Personal loans for a short period are disbursed more easily:

Before approving your loan application, lenders usually look at your credit score, monthly revenue, and debt-to-income ratio. Although these conditions can be the same with both short and long-term personal loans, the probability of non-payment is greater for the latter. As a result, short-term loans are often accepted and disbursed.

Conclusion: One can either take a short term personal loan or a long term personal loan. You have to choose according to your need for the loan, nature, interest rate, tenure, etc.

Also read this: Impact of Personal Loan on CIBIL Score