Short-term loan for 3 months: Benefits, risks, and how it works
A 3-month personal loan provides quick access to funds without collateral, but higher interest rates, penalties, and limited loan amounts make it essential to compare options before borrowing.
Personal loans have become quite popular in recent times as they provide instant loan disbursal and help you get financial assistance if you are in an emergency situation. These loans are usually unsecured and do not require collateral.
If you are looking to meet your short term financial goals and want to borrow a short term personal loan for 3 months, it is advisable that you understand its features as well as fees and charges before applying.
Features of short term loans
| Feature | Description |
|---|---|
| Fast approval & disbursal | Most short-term loans are approved within minutes to a few hours and disbursed within 1–2 business days. |
| Unsecured loan | No collateral is required, making it accessible for borrowers without assets to pledge. |
| Credit score boost | Timely repayment can help improve your credit score, enhancing future loan eligibility. |
| Fixed 3-month tenure | Loan repayment is due within 90 days, offering predictable repayment scheduling. |
| Higher interest rates | These loans typically come with higher interest rates due to their short tenure and unsecured nature. |
| Short commitment period | Ideal for emergency needs without long-term repayment obligations. |
Drawbacks of short term loans
- High interest rates: These personal loans are granted for 3 months. Hence, the interest rate which you may get will be even higher than regular personal loans.
- Penalty charges: If you fail to repay the loan on time, your personal loan EMI will attract penalties and charges which increase your EMI amount resulting in increased financial burden.
- Impact on credit score: These short term loans can impact your credit score if you fail to repay even one instalment on time. This can in fact impact your future borrowing.
- Limited loan amount: These personal loans are offered with small amounts. Hence, if you want to borrow higher amounts, you may not be able to fulfil your requirements.
Hence, it is advisable that you choose your personal loan amount wisely and do not borrow more than you can afford. You must also explore other options before applying for the personal loan so that you can compare and choose the best option for you.
If you have a higher credit score, you can get a low interest rate on your personal loan deal. With this, you can make informed decisions and avoid any unnecessary financial burden.
How short-term loans work
- Check your eligibility: Financial institutions generally check your credit score, income proof, and employment details before approving a short-term loan.
- Apply online or through the application: Most lenders provide fully digital applications. You need to provide your PAN, Aadhaar, income details, and upload necessary documents.
- Application approval: If you are found eligible, you will receive instant approval. Some lenders may ever take a few hours.
- Loan disbursal: Once your loan is approved, the amount is disbursed into your bank account, usually within 24–48 hours.
- Repayment strategy: Consider repaying the loan through EMIs or lump sum depending on the lender’s policy within 90 days to avoid penalties.
This simple yet fast process is ideal for salaried individuals and even for self employed borrowers who are in need of urgent funds without any hassle of paperwork, waiting time or collateral.
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