Know This Before Applying For A Short-Term Personal Loan

Banks and NBFCs offer short term personal loans for tenures of 1 year or less. However, few lenders also offer tenures of 2-3 years. Since it is a personal loan, the applicants need not submit any collateral. You can use the loan amount to cover various needs such as medical emergencies, weddings, travel, large purchases, etc. Though it has various benefits, you may have to pay higher EMIs. Hence, you must consider certain factors before you apply for a short term personal loan.

Features of a Short Term Personal Loan

  • No collateral needed: You don’t have to submit any collateral as it is an unsecured loan.
  • Can be availed even with less credit score: If you have a poor credit score, you can avail of a short term personal loan by submitting an alternate source of income. 
  • Minimal documentation: You can get your loan approved instantly with just minimum documentation.
  • The short tenure of repayment: You can repay your loan amount starting from 1 month to 1 year.
  • Flexible end use: You can use the loan amount to cover various financial needs.

Eligibility Criteria For Short Term Personal Loan

  • The applicant must be a citizen of India.
  • The applicant must be between the ages of 21 and 60 to be eligible for short-term personal loans.
  • The applicant must have a minimum work experience of 1 year in the current organisation.
  • The applicant must have a credit score of above 750.

Documents Required for Short Term Personal Loan

For Salaried Employee:

Sl. No.ParticularsDocuments required
1Proof of IdentityAadhar Card, PAN Card, Driving License, Passport
2Proof of AddressElectricity Bill, Water Bill, Passport
3Proof of IncomeSalaried: Bank statement for the past six months
4Work experienceEmployment Certificate for a minimum of 1-year experience

For Self-Employed:

Sl. No.ParticularsDocuments required
1Proof of IdentityAadhar Card, PAN Card, Driving License, Passport
2Proof of AddressAadhar Card, Electricity Bill, Water Bill, Passport
3Proof of IncomeBank statement for the past three monthsSalary Slips of three monthsIncome Tax Returns for the last three yearsBalance Sheet and Profit & Loss Statements for the last three years audited by a CA.

Factors To Consider Before Applying For Short Term Loans

Here are a few factors to keep in mind before you apply for a short-term personal loan:

  1. Impact on your Credit Score: Since short term personal loans have higher EMIs, you must make sure you repay your loan on time. Late payments can affect your credit score negatively.
  2. Rate of Interest: Since no collateral is involved, lenders may charge higher interest rates. So, do thorough research, compare the interest rates offered by various lenders, and choose the one that offers the lowest.
  3. Delayed Payment Charges: Lenders may charge you a late fee if you fail to pay an EMI on time.
  4. Processing Fee: Lenders charge processing fees when availing of a loan, along with standard GST in most cases.
  5. Penalty Charges: Upon late payment, you will be charged a penalty interest charge. And the amount will increase daily.

Final Note

Short term personal loans can help in times of severe urgency. And although EMIs are higher, the interest rate you incur overall is less. Keeping the above-mentioned factors in mind, you can apply for a personal loan through Buddy Loan. Being one of the best loan aggregators in India, it helps you have a hassle-free process when availing of a personal loan.

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