A short term loan is a type of personal loan availed for a time period of less than 12 months. Nowadays, considering the changing lifestyles of people, their basic requirements have changed tremendously as well. While earlier majority of the common people used to save for the future, travel, dining out etc. seem to have become the most-preferred choices of the millennial generation of today. It is to cater to this target market that various lending establishments have come up with online short term loans.
These loans normally have more flexibility regarding their repayment, but within the pre-decided tenure. Although majority of banking establishments offer personal loans with tenures of more than 12 months, some of them, as well as few NBFCs, are experimenting with short term loans too these days. However, majority of these short term loans are offered by peer to peer lending entities and digital NBFCs who are proving to be a major gap filler in the Indian unsecured lending space.
A short term loan can be availed by both salaried individuals as well as self-employed people who can show proof of regular income to the lender. In most cases, the quantum of online short term loans varies from ₹ 10,000 to ₹ 2 lakh; the tenure is anywhere between 1 to 12 months.
One of the major ways in which these short term personal loans are transforming the Indian lending industry is that they are providing new age borrowers with an effective means to avail short term credit, on workable terms.
There was a huge need for such loans in the country’s lending space as most banks and NBFCs wouldn’t actively offer them to the interested borrowers. These conventional lenders normally extend personal loans of minimum ₹ 1 lakh. The ones open to extending lower amounts would ask for exorbitant interest rates. Hence, there was a big need for lenders who could extend lower amounts, with repayment tenure less than one year.
Such short term loans are proving very useful for borrowers who have good profiles and require small loan amounts for shorter time periods only. Then there are adequately leveraged high DBR (Debt Burden Ratio) borrowers who can’t avail such loans because of stringent norms followed by banks and NBFCs. These borrowers can make excellent use of this loan product. Other than these borrower types, short term loans are a good option for people working with smaller companies which are not recognized by big lending establishments; as well as the borrowers who are availing credit for the first time or have a low credit rating.
On the whole, these loans are resulting in financial inclusion of a large majority of unsecured loan seekers who are normally rejected by the banks and NBFCs.
You can easily find all kinds of short term personal loans through the GoSahi platform. All you need to do is input some basic details and you will be presented with all the offers you are eligible for. Once you have picked the right one depending upon your needs, GoSahi can handhold you through the entire process, ensuring that the loan amount gets credited into your account, within the promised timeframe.