Medical emergencies, bill repayments or shortfalls in cash are very common in everyone’s life. With regular expenses and fixed earnings, it becomes really difficult to manage these sudden urgent needs of money.
This is when quick and fast short-term loans can be really helpful. They are easily available with less documentation and fast approvals. Being short term, you do not have to pay a lot of interest too, and this makes life really very convenient.
During an emergency
During an urgent cash crunch, online short term loans are always the best bet! All you would need to do is apply for a loan with a few documents that are needed. After that, you can receive the loan amount in your bank account within a few hours.
The lenders have the authority to carry out direct deposits to your bank which enables them to transfer funds online to your account. Before they do that, they would sign an online agreement that contains all the terms and conditions. Make sure to read them very carefully before you agree and proceed with the loan.
Features of short term loans
Payday loans and short term emergency loans have become common these days as they provide you with a given amount in a short period. Let us now explore the features of short term loans in details:
- The turnaround time of these loans is really less. Some online lenders even provide the loan within a few hours. This can be a great benefit when you are in an emergency. These lenders have round the clock services on all days and even on weekends and other public holidays.
- Depending on your eligibility (income, credit score) you would be able to avail a good amount of loan from these applications.
- The state regulation has governed the fees that these NBFCs can charge from you, even though the rate of interest varies from one lender to another.
Advantages and disadvantages
Here are the merits of availing short term online loans:
- Unlike the mainstream banks that have a huge documentation process, online loans are easier to avail with lesser hassles. You would not have to wait for long to get the funds to your bank account.
- You would be able to use the money for any need. For example, when a bank provides a home loan, you would not be able to use the money for anything else except building your home. But, in the case of these loans, you can put them to use for anything you want. The lenders do not put any restrictions on fund usage.
- These are all unsecured loans, hence you would not need any collateral while availing this.
- You would get a lot of options in terms of lenders to choose from. You can compare the fees, repayment schedule and interest rate of the lenders before availing for loans from them.
Even though short term loans provide a lot of help when you need money now, they do have some downsides as well.
- Generally, these loans come with a very high-interest rate. You might have to pay 10-15% interest to avail the loans.
- These loans as the name suggests is short term in nature. This means you would need to repay soon the whole amount along with the interest. This can be a challenge for a few people who need a good amount of money and does not have a source of repaying the same sooner
Things to remember when you avail short-term loans
The small-term online loans are very easy to access, thus come with a high-interest rate. The rates vary from one lender to another. Some of them might charge you per day while others do it every month.
You should also look into the amount of processing fees charged by the lenders. Most of them charge around 2% of the total loan amount.
You should also check out about the late payment fees.
Make sure that they are legit lenders before you hand over the documents to them.
Finally, be sure that you would not face problems repaying them, as failing to do so would not only cause you a lot of trouble but would also impact your credit score very badly.