A loan, just like any other debt instrument is a transaction between a lender and a borrower at a fixed interest rate. These loans can be both commercial loans and personal loans and are available for various time periods and at interest rates which depends on the loan amount and the type of loan taken. These loans are also called “payday loans” and they come with higher interest rates and other fees, when compared with the long term loans. The process for application of these loans is pretty simple and the same has been illustrated below;
- The loan is normally applied keeping in mind that the same would be repaid within a short span of time.
- A photo ID with the proof of address is required.
- The verification of your employment including your current salary or income might be done before this loan is processed.
- Borrower might be asked to provide with post dated cheques in lieu of the loan amount. This is provided as a security.
Off late this loan process has been started online also and thus it has become much easier for someone trying to apply for these loans. Normally these loans are taken to fund a sudden need of cash, or for funding a vacation that someone is planning to take, or for furnishing & refurbishing of one’s apartment.
Also, it is quite imperative that these loans are very different from their bigger brother (the long term loan) in both the term of the loan along with the interest rate & fees that each of them attract. At the same time, the amount that one can get disbursed in a short term loan is very low and has an upper ceiling, while when it comes to long term loan, though there is an upper ceiling still the loan amount is quite good.
The only good or saving grace about the short term loans is that the application process is pretty easy and the borrower does not need to provide with a lot of papers, which might be the case when it comes to applying for a long term loan. Short term loans can easily be used to fulfill that sudden need of cash for which one does not want to approach their friends or relatives, and thus these loans also helps one in keeping their relationship healthy while getting the loan in an easy manner.