Whether it’s an unplanned family vacation, a medical emergency, an online course for you or your children, short-term credit is a lifesaver. These loans range from INR 1000 to INR 500000, and they don’t have any hidden charges. You can repay these loans electronically through EMIs, and the processing fees are low.
Not only does short-term credit help you out by providing quick credit with minimal documentation, but they also have long-term benefits. These loans come with quick approvals, a hassle-free online application process, and flexible payment terms.
Given below are a few ways in which these short term credits could help you!
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Improving Your Credit Score
With short term credit, you pay your loans and credit card bills on time. This improves your credit history, and you have a higher CIBIL score. Whether you want to start a business or need a loan for expanding it, this score is significant.
No matter what stage of your personal life or business you are in, a high CIBIL score makes life a lot easier. Whether it’s lenders, bankers, or employers, they all prefer applicants with a high CIBIL score.
Avoid Debt Accumulation
Debt, if unnoticed, has a tendency to build up over time. You have both principal and interest in your EMIs, and if you keep paying the minimum amount due or missing payments, you have a higher debt burden. This has an adverse impact on your credit score since an essential factor in the calculation of this score is consistency in repayment.
When you take short-term credit, you avoid debt build-up. You pay your bills before the due dates and don’t carry debt forward to the next month.
Realise Financial Goals
As an individual, you would like to make sure that sufficient funds are available at different points of your life for various financial goals.
These goals include your retirement, car, home, higher education for your children, seed capital for your dream business, and perhaps a foreign trip. To reach these goals, you need to save and invest on a regular basis as per the advice of the financial planner.
An emergency could upset your financial goals. This is when short-term credit helps you out.
With an instant short-term loan, you can easily handle any emergency and pay it off in easy instalments. You won’t have to liquidate your investments, and both your long-term and short-term financial goals are on track.
Smooth Cash Flows
Your cash outflows include your routine monthly expenditure, investments, premiums, and taxes. Your inflows include your monthly income and interest income. A delay in receiving your monthly income could disrupt your cash flows and put you in a crisis.
You need positive cash flows at all stages of your life, and short-term credit helps you in doing this. While you may be able to stick to your budget under normal circumstances, there are exceptional cases where a sudden expenditure arises. Your cash flows remain stable, and you avoid a crisis in the long run.
Higher Loan Approvals
When you pay your EMIs on time, you get a higher CIBIL score. If you don’t make your payments on time, your credit score falls. When you apply for a loan, you will get a lower amount approved against what you had applied for.
If you have a temporary fund crisis, you can go for a short-term credit line. This will help you avoid any payment defaults. When you have a consistent payment record, your CIBIL score improves, and you can get higher loans sanctioned.
Not only this, but you will also get competitive interest rates and a flexible repayment period. Your loan will be processed faster and less documentation will be required.
Acceptance As Tenants
Just like a bank or a financial institution uses a credit score to assess if you will pay your loan on time, a landlord uses it to check if they will get their rent on time. When short-term credit helps you avoid any default, your credit score is higher.
The landlord is likely to prefer tenants with a higher CIBIL score. You may even have to pay a lower security deposit. There are chances that you will get offers from different landlords in your chosen area, and you can choose the best deal.
Higher Credit Limit on Credit Cards
With short-term credit, you will not have to use the revolving credit facility in credit cards and pay a minimum amount. This leads to your dues increasing on a monthly basis, and eventually, you become a defaulter.
Instead of using your credit card, try short-term credit to pay off your emergency purchases or medical bills. With lower interest rates, it will be easier for you to repay the loan and keep your credit score intact.
With a high credit score, you will be entitled to a higher credit limit.
Improved Buying Opportunities
Not only is your credit score important to lenders and landlords, but some real estate sellers also check your credit score.
A poor credit score means a person who is irresponsible financially, and this could affect your buying prospects. If you have a need for short-term funds, take these instant loans and stay debt-free. Sellers would prefer you over a buyer who has a poor CIBIL score.
Long-term Business Goals
If you are a small business owner, there are times you would have temporary fund requirements when there is an undue delay in receiving customer payments. Instead of going for an expensive personal loan, there are cheaper loans that can help you fund these shortages.
With a consistently high credit score, you will get loans from banks and other financial institutions when you need them. Scaling up your business will be much easier, and you can achieve your long-term business objectives.
Lower Insurance Premiums
Whether it is vehicle insurance or professional liability insurance, your credit score not only determines your premium but also decides if you are entitled to insurance at all. A low credit score is a red flag for insurers since there are chances you won’t pay your premiums on time.
If you maintain your credit score with short-term credit, you get favourable premiums for insurance on a long-term basis.
Final Thoughts
Short-term credit not only helps to get through a temporary funds crisis but has a positive impact in the long-term as well. Whether you are looking for a home loan, business loan, or car loan, your credit score counts and short-term credit help to keep it in check, ensure long-term stability with short-term credit.
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