Short-Term Loan

A short-term loan, as the name implies, is a loan given to an individual for a brief period, usually lasting from one month to a year. These loans are beneficial for people who can't avail of longer-term loans from banks or other lenders for various reasons. They're typically unsecured, meaning you don't need any security or collateral for the loan. These loans are also known as instant personal loans.

Short-Term Loan Interest Rates & Charges

Short-term personal loans usually start with interest rates of 11.99% p.a. However, note that some lenders may also consider loans with 2-3 year terms as short-term.

Here are the highlights of short-term loans:

Loan Amount ₹10,000 up to ₹15 Lakhs
Type of Loan Unsecured short-term personal loan
Interest Rates Starting at 11.99%* p.a.
Loan Tenure Starts from 6 months to 3 years
Processing Fees Up to 4% of the loan amount
Note: The interest rates are dynamic and subject to change based on your credit history and creditworthiness.

Short-Term Loan Lenders

Find the perfect financial solution tailored to your needs through a personal loan. Here are The top Banks and NBFCs offering short-term loans:

Top Banks Offering Short-Term Loans

Top Banks Interest Rates (p.a.)
State Bank of India 11% onwards
HDFC 10.50% onwards
Axis Bank 10.49% onwards
Note- The interest rates mentioned are subject to change. Do visit the website for more information.

Top NBFCs Offering Short-Term Loans

Top Banks Interest Rates (p.a.)
Buddy Loan 11.99% onwards
PaySense 16% onwards

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Note- The interest rates mentioned are subject to change. Do visit the website for more information.

Eligibility Criteria For Short-Term Loan

To qualify for a short-term personal loan, it's important to meet specific eligibility requirements. These criteria may differ among lenders, so it's advisable to check with your lender to understand their specific conditions for short-term personal loans. Here are the general eligibility requirements for a short-term loan:

Citizenship: Must be an Indian resident.

Age Range: Minimum age of 21 years and maximum age of 60 years.

Employment: Eligible categories include salaried individuals, public/private sector employees, government workers, and self-employed professionals/non-professionals.

Minimum Salary: ₹15,000 per month

Creditworthiness: A credit score of 750 or higher enhances the chances of securing a personal loan.

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Documents Required for Short-Term Loans

To ensure a smooth application process, you must submit the necessary documents for quick loan approval.

Proof of Identity: Government-issued photo ID like an Aadhaar card, Passport, or Voter ID.

Proof of Address: Valid address proof such as utility bills or rental agreements.

Income Proof: Documents like salary slips, bank statements, or income tax returns.

Passport-sized photographs.

Choose the best short term loans as per your requirement from below

Short-Term Loan EMI Calculation

If you're thinking of getting a short-term instant loan, it's important to check if you can comfortably repay it each month. You can easily do this using a Personal Loan EMI Calculator. Just put in the loan amount, interest rate, and how long you want the loan for, and the calculator will tell you exactly how much you need to pay every month. This tool makes it simple to figure out your monthly loan payment.

Monthly EMI 86
Principal Amount 1,000
Total Interest 32
Total Amount 1,032.00

Year Month Principal (A) Interest (B) EMI (A+B) Balance Loan Paid to Date (%)

Calculating the Equated Monthly Installment (EMI) for a short-term personal loan is simple but crucial for effective financial planning. Utilize the following formula:

EMI = P x R x (1+R)^N / [((1+R)^N) - 1]

EMI = Equated Monthly Installment
P = Principal Loan Amount
R = Interest Rate
N = Loan Tenure in Months

Let's calculate the EMI for a ₹200,000 personal loan at 11.99% annual interest rate for 1 year (12 months):

Loan Amount = ₹200,000
Monthly Rate = 11.99%/12 = 0.999167%
Loan Term = 12 months

Plugging this into the formula:
EMI = [2,00,000 x 0.999167x (1+0.999167)^12] / [(1+0.999167)^12-1]
EMI = ₹17,769/-

Therefore, the monthly EMI for a ₹200,000 loan at a 10.90% interest rate for 12 months is approximately ₹17,769/-

Types of Short-Term Loans

Lenders offer various types of short-term loans to meet immediate financial needs. From personal loans to overdraft facilities, you can choose options that offer quick solutions without the long-term commitment. Let's look at a few:

Personal Loans: A loan for personal needs is a popular choice for short-term needs. They don't require collateral, but lenders offset the risk with higher interest rates. Different types cater to specific needs, like weddings, education, home renovation, medical emergencies, or travel.

Overdraft Facility: Banks offer an overdraft facility, allowing businesses to withdraw more than their account balance. It's useful for managing cash flow, letting you pay vendors while waiting for customer payments, thus maintaining working capital.

Bridge Loans: Bridge loans assist when waiting for another loan. Often used in property transactions, they cover the down payment for a new property while waiting to sell an existing one. These loans have high-interest rates and use the property as collateral.

Demand Loans: Demand loans are for short-term financial needs and can be taken by individuals or businesses. These are secured loans, meaning you need to provide collateral for approval. Individuals often use insurance policies, fixed deposits, or NSCs as security, while businesses can use invoices, lease rentals, or accounts receivables.

Benefits of Short-Term Loan

Short-term personal loans offer dynamic features and quick accessibility to financial solutions. From versatile usage to minimal documentation requirements, these loans offer a range of benefits. They are:

Versatile Usage: Short-term personal loans serve a range of purposes, including weddings, vacations, home renovations, education expenses, personal purchases (such as electronics or furniture), business ventures, and unexpected medical emergencies.

No Collateral Required: These loans are unsecured, eliminating the need for borrowers to provide collateral. This feature makes them accessible and beneficial for individuals who may not have assets to pledge.

Minimal Documentation: The application process for short-term personal loans involves minimal paperwork and documentation. This streamlined approach ensures a quick and convenient experience for borrowers.

Quick Disbursal: Short-term personal loans are known for their swift disbursal process. The absence of extensive documentation and collateral requirements contributes to the efficiency of getting funds into the hands of borrowers promptly.

Steps to Apply For a Short-Term Personal Loan

Getting instant funds during an emergency can be extremely helpful. With Buddy Loan, you can get quick loans from top RBI approved lenders in just minutes. All you have to do is follow these few steps and get your loan in minutes!

Step 1: - Visit or Download & install the Buddy Loan app (Android or iOS).

Step 2: Open the Personal Loan Application Page. Provide the mobile number and enter the received OTP.

Step 3: Specify the desired loan amount & personal email. Next, choose the Personal Loan option

Step 4: Choose the employment type (Salaried, Self-Employed, or Student) and the salary mode (bank or cash).

Step 5: Enter your work details (Including company name, years of service and Designation)

Step 6: Enter your personal details (Including Full Name, PAN, address DOB & Gender)

Step 7: Provide your communication address, and income details and Click the ‘Submit’ button.

Ready to take the next step? Apply for a personal loan with tenure upto 5 years!

Frequently Asked Questions

Short-term loans are small, quick loans typically repaid within a few weeks to a year. They address immediate financial needs and often come with higher interest rates.

Yes, some lenders offer short-term loans for individuals with less-than-perfect credit. However, interest rates may be higher, and eligibility criteria can vary.

Short-term loans are versatile and can be used for various purposes, such as unexpected expenses, medical bills, car repairs, or bridging financial gaps until the next payday.

The approval and disbursement process for short-term loans is often faster than long-term loans. Many times, funds can be available within a day or two.

While convenient, short-term loans can be riskier because of higher interest rates. Carefully assessing your ability to repay and exploring terms and fees before borrowing is essential.

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