In order to meet immediate financial needs, individuals often take short-term loans such as a personal loan, loan on credit card, overdraft, bridge loan, etc. These are unsecured loans and the repayment tenure ranges from six months to one year. Lenders process these loans quickly and disbursement is done within a couple of days of processing the loan application form.
Short-term personal loan
These loans are disbursed at a short notice without any collaterals, the ticket size of the loan is small and tenure is usually for one year. The short-term personal loans are even given to those with lower credit score, and offered to those with a monthly salary of around Rs 25,000. One has to submit ID proofs such as voter ID, Aadhar card, PAN card and an address proof. The lender will also ask for ITR/Form 16 and a recent bank statement reflecting salary credited into the account. As the loan is taken for a shorter period, the EMI is affordable which makes it attractive as compared with a long-term loan.
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Bridge loan
If an individual is looking to make a down payment for buying a house, a bridge loan can come handy, especially if one wants to sell an existing house and pay the amount for the new property. These loans are offered for a period of 12 to 18 months.
In a bridge loan, the lender will provide up to 70% of the new property’s cost depending on the applicant’s income. It will charge a processing fee and will mortgage the new property. The interest rate of a bridge loan is higher than long-term home loans. Lenders often give an option to convert the bridge loan into a long-term home loan if the old property does not get sold during the entire period of the loan.
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Credit card loan
A credit card loan is pre-approved and the card holder just needs to confirm the loan and the bank will process the loan in a couple of days. No documents are required. The tenure of the loan is between one to five years and will have to be repaid as EMI, which will be added along with other expenses paid through the card.