No matter how meticulously you budget your money, unexpected expenses are bound to happen –a medical emergency or a critical car repair can throw a wrench into your plans when you least expect it.
When you cannot put off a car repair or medical expenses, and getting money from family and friends is not possible, then applying for a personal loan is the next best option. But traditional personal loans have a lengthy application process, and your emergency situation needs immediate attention. When the need is small, temporary, and urgent, many people find it convenient to apply for a small personal loan.
What is a short-term loan?
A loan taken for a short duration is termed as a short-term small loan. Unlike home loans or car loans that have a long repayment tenure, small loans are typically repaid within a few days, weeks, months, or a year.
Simply put, a small loan is a type of unsecured personal loan taken to finance a small but urgent short-term financial need.
How a Small Short-Term Personal Loan Works
Benefits of Short-Term Personal Loan
1. Fast and Easy Cash – The biggest advantage of a short-term personal loan is that it gives instant access to the money that you need quickly. If you are facing an emergency that needs quick access to money, going through a lengthy loan approval process isn’t helpful. Small short-term personal loans give you the money you need in a much shorter time than other types of loans.
2. Collateral-Free – Small loans are usually not tied to any collateral (house, car, or any prized possession). This means you get the loan without risking any of your assets/things.
3. Less Emphasis on Credit Score- Most of the small loan lenders do not lay heavy emphasis on your credit score and credit history, provided you have a steady source of income and the ability to repay. For people who do not qualify for traditional loans, the short-term loan allows them the ability to get money when they need it.
4. No Long-Term Commitment– Larger loans require you to commit for a long period of time. The loan repayment tenure lasts for years. With small short-term loans, you can get the loan dusted off within days, weeks or months, and move on with your life.
5. Flexible Repayment Option– Many small loan lenders are flexible to work with you and design a payment plan that’s best suited for your specific needs and preferences.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters, and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at email@example.com.
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