Discover the Top 5 Short Term Loan Secrets in India That Banks Don’t Want You to Know in 2024
Financial institutions typically provide short-term loans with duration’s generally spanning 1-2 years.
These loans are primarily unsecured, which means you are not required to offer collateral as security to access them.
Although these funds can be swiftly obtained, they earn the label “short-term” not due to the speed of disbursement, but rather because of their associated repayment tenor, typically ranging from 6 to 18 months.
What sets these loans apart from their conventional counterparts is their accessibility. Short-term loans in India cater to small financial needs.
Here, we delve into the details of the five most popular sources of short-term loans to empower you with the knowledge needed to make an informed financial decision.
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Trade Credit
Trade credit represents one of the most cost-effective means of accessing interest-free funds. It arises when a lender extends you the time to pay for a purchase without imposing additional costs.
Traditionally, trade credit terms span 30 days. However, negotiating for a longer tenor can be considered, aligning it better with your financial plans.
A flexible repayment schedule allows you to leverage extra time and funds for other financial endeavors.
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Bridge Loans
Bridge loans serve as a financial bridge until you secure a larger loan, typically related to property transactions in India.
For instance, if you intend to purchase a new house but lack sufficient funds while your old property remains unsold, you may prefer to wait until the old property is sold.
However, during this waiting period, property prices could rise. To address this dilemma, you can opt for a bridge loan, which offers dual benefits.
It provides the necessary funds for the new property purchase while allowing you time to secure a favorable deal for the old property.
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Demand Loans
Demand loans are instrumental in meeting urgent financial obligations. You can pledge assets such as insurance policies and savings instruments like NSCs as collateral for these loans.
The loan amount is determined based on a certain percentage of the maturity value of these savings instruments.
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Bank Overdraft
Bank overdraft is a facility accessible through your current account. It enables you to withdraw money even when your account balance falls short of covering the withdrawal amount.
Essentially, it allows you to borrow within a predefined overdraft limit. While the interest rates are typically lower than those of credit cards, be vigilant about additional charges, including withdrawal fees.
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Personal Loans
Personal loans are versatile and can be used for various purposes, such as home renovations, weddings, higher education expenses, travel, medical emergencies, or debt consolidation.
Lenders typically base personal loan approvals on factors like income, employment history, credit history, and perceived repayment capacity.
Unlike home or car loans, personal loans are unsecured, meaning the lender lacks collateral to auction if you default on repayment. Personal loans offer substantial loan amounts with flexible repayment tenors.
Bajaj Finserv, for instance, provides personal loans in India of up to Rs. 40 lakh, featuring flexible repayment tenors ranging from 6 to 96 months. These loans offer quick approval, with funds credited to your bank account within 24 hours*.
You can also opt for a Flexi format, enabling unlimited withdrawals and prepayments. Notably, interest is charged only on the portion of the loan used, potentially reducing your personal loan EMIs by up to 45%.
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