A situation of financial crisis or an emergency to fulfill a financial need can be anybody’s combat at any time; it is impossible to get the exact foretelling about it. As a fact, countless people tend to face it during economic crises or pandemics. This is the time when one has no option but to take a loan.
While this is a suggested solution, it works as an effective solution only if one knows which type of loan to take. Well, this decision or selection is based on many factors such as ongoing income, the purpose of your loan and the ability to repay on time with interest.
In case of an emergency such as an urgent unavoidable requirement, whether personal or professional; a short-term personal loan is recommended. Well, it is recommended for good reasons. In this post, let’s explore the same.
Overview of Short-term Personal Loans
A short-term cash loan is meant for fulfilling an urgent financial need. The borrowed sum is typically repaid with interest mostly within a year. To get this loan, you decide to borrow a sum from a reliable lender, which is such that you can repay on time. You also agree with the terms and conditions of borrowing, which encompass interest rates and stipulated duration of repayment.
The lender and you both decide the date of repayment if the amount to repay along with interest applied is affordable for you. Then, the creditor performs a credit check to evaluate the credit history prior to sanctioning your loan request.
If your application is then approved, you receive the requested sum. Then, you start repaying on the decided date until the full amount is paid.
Reasons Why Short-term Personal Loans Are Helpful in an Emergency
- No Collateral: This is a motivating reason as you are taking a loan to fulfill an urgent financial requirement. You get the amount without giving any guarantee or asset as security given to the lender.
- Speedy Approval: This is perhaps the most common expectation of borrowers looking for funds during an emergency. They need quick cash. If the requested application takes a long time for approval, it does not fulfill the need of the borrower. Thus, a short-term personal loan is approved quickly.
- Minimal Documentation: Unlike other types of loans, these require just a few documents for fast processing of the application. This makes the process hassle-free.
- Low Repayment Burden: Most short-term loans are paid off within 365 days. This means that the interest amount you pay is lower than that of a standard personal loan.
- Economical Rate of Interest: The credit for this goes to the high competition in this field of loans. The interest rates on offer are, thus, reasonable enough to attract the probable borrowers.
- Expansive Amount Range: You can easily expect approval for the amount you want or even higher, if the lender finds that you are a reliable borrower. The approval is reliant on several factors as mentioned above, which inform the lender whether you are a good borrower or not.
- Adaptable: It is easy to find lenders who can come up with a loan that is ideal for your short-term requirements. Moreover, you can use the borrowed sum for any purpose for which no questions are asked.
- Minimal Eligibility Criteria: While eligibility criteria for short-term lending differ from one lender to another, they are usually only a few such as nationality, age and income.
The rate of interest varies from one creditor to another but it typically begins at or above 10%. It could be even less than this benchmark rate. To apply the rate, creditors consider your creditworthiness.
So, do you find short-term personal loans attractive for urgent needs?