When we talk about loans, anyone would first think of a personal loan. These loans are also called vanilla loans as they are designed with the bare minimum features, only with the idea to meet the cash requirements of an individual. A prime example of such a loan is “term loan”. The classic definition of a term loan is a loan that is to be repaid over a fixed period with regular payments. Nowadays, personal loans have been specifically customized to make them more favourable for specific needs, unplanned expenses, medical emergencies or any kind of emergency situations.
What are the different kinds of short-term personal loans available in the market?
With a change in the spending habits and lifestyle of millennials, the markets have paved the way for innovations in the personal loan segment. Unlike the previous generation who believed in saving before spending, the Gen Y believes in spending on experiences to make the most of the current day. They dream of enjoying a better lifestyle, luxurious cars, super bikes, and international holidays and lots more. And they are more than happy to pay the price for these valuable experiences. For this, financial institutions are customising products that help these millennials achieve these dreams without adding the load to their pockets.
While we speak about short-term loans, there are a few products that excel in meeting the urgent cash needs of individuals. Apart from loans like Travel loan, marriage loan etc, there are a few loans that come handy for your general fund requirements. Take a look -
Credit Card Takeover Loan
There are times when your expenses have temporarily hiked, and the result is often seen in the form of a large credit card debt. With reference to such situations financial institutions and online lenders have designed a short-term personal loan to rescue you out of such debts. A credit card takeover loan is a personal loan for debt consolidation. Credit card debt consolidation loan allows you to clear all the debts resulting out of multiple credit cards at a lower interest rate.
A credit card charges interest anywhere from 36%–40%, while a loan to clear credit-card dues charges about 16%–20% interest. The tenure of this loan for debt consolidation varies from 3–9 months. For credit card takeover loans, the interest needs to be paid every month and the principal amount needs to be paid in a lump sum at the end of the loan tenure.
Advance Salary loan
An advance salary loan is a personal loan given against your salary. It is a type of short-term loan. The loan amount is directly proportionate to your salary and can be in multiples of the same. These instant cash loans are perfect for people who need immediate financing for unforeseen situations. Lenders provide these loans for about 12 months of the loan tenure. This enables a borrower to meet his cash requirements and clear the short-term loan at the earliest.
Unexpected expenses strike at the least expected times. It may also not be the right call to withdraw from your current investments. Short-term loans like Advance salary loans prove to be the best bet in such scenarios.